Loans
Private Alternative Student Loans
Consider this first
Families are encouraged to borrow only when necessary and only in the amount required to meet educational expenses. All borrowing decisions should be made with careful and deliberate consideration, with federal loan options evaluated first. You will want to make sure you can comfortably afford your student loan indebtedness based on your expected income upon entering repayment, and that you are comfortable with the estimated monthly payment.
For those considering private student loans, it is important to note that these loans are credit-based and may require a creditworthy cosigner. Additionally, students who are not enrolled at least half-time are not eligible for federal loan programs; in such cases, private student loans may serve as an alternative funding option.
What are Private Alternative Student Loans?
Private student loans are credit-based loans obtained from individual lenders that help students "bridge the gap" between the financial aid they have been awarded and any additional funds they may need to achieve their educational goals. Being approved for a Private Student Loan depends largely on the borrower's credit score and may require a co-signer. It is the borrower's – and any cosigner's – responsibility to make the financial decision they believe is best for their situation.
What to Consider When Comparing Loans/Lenders:
Program-Specific Considerations
- Confirm your program is eligible
- Check for higher borrowing limits for professional programs
Interest Rates & Total Cost
- Compare fixed vs. variable rates
- Review APR for true cost
- Interest typically accrues while in school
- Look for rate discounts (autopay, co-signer)
Credit & Co-Signer Requirements
- Strong credit needed for best rates
- Co-signer may improve approval
- Review co-signer release options
- Consider debt-to-income ratio
Flexibility & Repayment Support
- Forbearance during hardship
- Deferment for training or unemployment
- Refinancing/consolidation options after graduation
In-School & Post-Graduation Options
- Full deferment vs. in-school payments
- Interest-only payment options
- Grace period after graduation
- Residency/fellowship deferment options
Borrowing Limits
- Coverage up to cost of attendance
- Review annual and lifetime limits
Important Protections
- Death/disability discharge varies
- No federal protections (IDR, PSLF)
- Read all terms carefully
We recommend you request a copy of your credit report from each of the three credit bureaus (Equifax, Experian, and TransUnion) as you are entitled to annually by law. While you must pay a fee to each of the three credit bureaus to obtain your actual credit score(s), it is important to at least check your credit report(s) annually for any errors or illegal use.
Regulation Z Requirements
Private Loan Regulations (Title X of the Higher Education Opportunity Act)
On February 14, 2010, both private lenders and institutions offering private student loans must comply with regulations issued by the Federal Reserve Board. Under the new laws, a lender offering private loans for postsecondary educational expenses must first provide a disclosure about loan terms and features at the time of application and must disclose information about federal student loan programs that may offer less costly alternatives. If the initial application reaches an approval status, a second loan disclosure statement must be provided to the student at that time. If a student accepts the loan terms provided in the second disclosure statement, a third final disclosure must be provided when the loan is consummated.
An additional requirement of the new private loan regulations requires an applicant to complete a "self-certification form" and return it to the lender before the lender may disburse the loan to the school. The "self-certification form" may be found on the lender's website and returned to your lender. If you need assistance completing the form, please visit the Office of Financial Aid at the University of Mississippi Medical Center. Each private lender may have a slightly different application process, so it is best to contact your private loan lender directly if you have any questions. Lastly, a lender must provide the student with a 3-day rescission, or "right-to-cancel," period after the final loan disclosure form is sent to the student. The 3-day rescission period means that once the school has certified your loan and it is ready to be disbursed, there is a mandatory 3-business-day waiting period before the lender may disburse loan funds to the school. If a lender only offers a mailed Final Disclosure (not online), then they must wait 6 days to disburse the loan to the school (3 days for mail time and an additional 3-day "rescission or "right-to-cancel" period).
Private Student Loan Regulation Z – FAQ
What is Regulation Z and why does it matter for private student loans?
Regulation Z is part of the Truth in Lending Act and was expanded under Title X of the Higher Education Opportunity Act. Since February 14, 2010, all private lenders and schools that offer private education loans must follow these rules to ensure borrowers receive clear, transparent information before taking on private loan debt.
What disclosures must lenders provide under Regulation Z?
Lenders must give you three separate disclosures:
- Application Disclosure: Provided when you apply. It explains loan terms and features and reminds you that federal loans may offer lower-cost alternatives.
- Approval Disclosure: Given only if your application is approved. It outlines the specific terms you qualify for.
- Final Disclosure Sent after you accept the loan terms. This confirms the loan is ready to be finalized.
What is the Self‑Certification Form, and why do I need it?
Before a lender can send funds to your school, you must complete a Self‑Certification Form. This form:
- Confirms your cost of attendance
- Lists your estimated financial aid
- Helps prevent overborrowing
You can find the form on your lender's website. If you need help completing it, the Office of Financial Aid at the University of Mississippi Medical Center can assist you.
Do all lenders follow the same application process?
Not exactly. While Regulation Z sets minimum requirements, each lender may have its own steps, timelines, or documentation needs. If you're unsure about any part of the process, contact your lender directly.
What is the 3‑day rescission or "right‑to‑cancel" period?
After the lender sends your Final Disclosure, you must wait 3 business days before the loan can be disbursed. During this time, you may cancel the loan without penalty. This waiting period applies after the school certifies your loan and the lender is ready to release funds.
Step‑by‑Step: How to Apply for a Private Alternative Student Loan
ELMSelect is a free, lender‑neutral tool that helps students compare private alternative student loans from multiple lenders in one place. When comparing private loans, look at interest rates, repayment options, credit requirements, borrowing limits, and available protections. Please note that you are not required to use any of these lenders—you may choose to borrow through any private lender, including lenders not on this list. We process private loan certifications for all lenders with equal timeliness and without partiality. Selecting a lender not on our historical lender list will not delay your certification.
- Complete the FAFSA and accept all federal loans.
- Review your credit report; consider applying with a cosigner.
- Compare lenders using the ELMSelect list or any lender of your choice.
- Apply for the loan that fits your needs.
- Complete the required Self‑Certification Form.
- Wait for the lender's credit decision.
- If approved, sign the Master Promissory Note (often online).
- Wait through the required 3‑day rescission period.
- Loan funds are sent to the university and applied to your account.
- Any remaining funds are refunded to you.