Private student loans, also known as alternative loans, are offered by private lenders to provide financing to pay for educational expenses and are intended to fill the gap between what you receive from other financial aid sources. They are not part of the federal student loan program and generally do not feature the flexible repayment terms or the borrower protections offered by federal student loans.
Private student loans typically have variable interest rates, meaning that your interest rate may change over time. The interest rates and fees you pay on a private student loan are based on your credit score and the credit score of your co-signer, if you need to have one. The interest rate and repayment provisions vary with each lender and will often change from year to year.
You may want to apply for a private student loan with a co-signer even if you could qualify for the loan on your own. In evaluating a loan application, lenders will look at your co-signer’s credit history. So, if your co-signer has a better credit score than you do, it could result in a lower interest rate and lower fees for your loan.
Securing and Receiving Your Loan
- Regardless of your financial circumstances, you should complete the FAFSA and apply for federal aid before applying for a private loan. If you are eligible for federal loans or are unsure of what the best option is, please review federal vs private loans information or charts for more information on the differences between federal and private educational loans.
- Thoroughly research and compare lenders. Evaluate interest rates, origination fees, application fees, repayment terms, repayment plans, and deferment and forbearance options to select the lender that best fits your needs. Be sure to also check each lender’s requirements for Financial Aid Satisfactory Progress.
- Complete the lender's application, which is usually available online, and indicate that you're attending Cal Poly. Your lender will electronically transmit your loan approval information to us for processing. We begin processing private loans in August.
- The Truth in Lending Act (TILA) requires you to complete and submit a self-certification form to all lenders for each individual application. Your lender should provide you with this Private Education Loan Application Self Certification document (PDF).
- Once processed by both your lender and Cal Poly, your loan funds will be added to your Financial Aid Award and will disburse according to the terms provided by the lender. The Truth in Lending Act (TILA) guarantees private loan borrowers a 10-day right of rescission. This is a period where money is held in order to give you a final chance to change your mind and cancel the loan without penalty. Because of this regulation, neither Cal Poly nor the lender can adjust when you will receive your loan.
- Continually monitor your Cal Poly email, which is our primary form of communication. We encourage you to check your emails often.
Researching and Comparing Private Loans
You can compare loan terms and interest rates using ELM Select's online comparison tool, which provides information for lenders that Cal Poly students and parents have used in the past. Simply enter "Cal Poly" in the School Search box and select the type of loan that fits your needs to review options.