Private Loans Guide

Private student loans are loans provided by banks, credit unions, or other private lenders to help students pay for college. Unlike federal loans, they are not issued or guaranteed by the U.S. Department of Education. Private loans can help fill the gap if other forms of aid (like grants, federal loans, or scholarships) aren’t enough — but it’s important to understand the pros, cons, and responsibilities before borrowing.

Before we go too far, find important student loan vocabulary defined here.

Here is some data about federal student loan debt in the United States.

Private Loan Research

Before choosing a private loan, it's important to shop around — the first lender you find might not offer the best deal. Use this section to guide your research and compare options carefully. We recommend using a worksheet like this spreadsheet to organize your research if needed.

Step 1: Explore Potential Lenders

Not all private loans are the same. Compare interest rates, fees, and borrower protections. Just as important is the lender’s customer service — this can impact your experience for years.

Tips:

Step 2: Evaluate Customer Service

Great customer service can make loan repayment less stressful.

Where to check:

Learn about the Better Business Bureau as a resource.
Consumer Financial Protection Bureau
TrustPilot

Use your worksheet to record customer service scores and any major concerns or complaints.

Step 3: Understand Interest Rates

Interest rates vary based on your credit score, loan type, and lender.

Types:

Fixed: Won’t change; good for predictability.
Variable: May start low but can rise over time.

Pro Tips:

Pre-qualify with a soft credit check to see personalized rate estimates.
A strong cosigner can improve your rate if your credit score is below 740.

Record rate ranges for fixed or variable options in your comparison table.

Step 4: Check Fees & Repayment Terms

Understanding the costs beyond the interest rate is crucial for post-graduation budgeting. Often, student loans are designed to be paid back in 10 years. Some loans may have shorter or longer terms which impacts the overall cost of the loan.

Key Questions to Ask

- Upfront Fees: Are there origination or processing fees charged when you take out the loan?
- Repayment Options: Does the lender offer flexibility (deferment, forbearance, or different repayment plans)?
- Penalties: Are there fees for late or missed payments?

Determine How Much You Need

When borrowing private student loans, aim to borrow only what you truly need — and what you can reasonably afford to repay. Private loans often carry higher interest rates and fewer repayment protections than federal loans.

Use the CAFE Planning Sheet to estimate any funding gaps for each term or academic year, especially for direct expenses like tuition and fees.

Steps to Estimate What You Need to Borrow

Estimate Your OSU Bill for the Term

Use your program’s tuition and fee calculator
Include charges like tuition, fees, and on-campus housing if applicable
OSU Tuition and Fees Calculator

Subtract Free Aid

Include grants, scholarships, savings, and any family contributions

Subtract Federal Loans

Maximize federal direct subsidized and unsubsidized loans first

The Remaining Amount = What You May Need in Private Loans

Only borrow what’s absolutely necessary
Consider earning income to help cover living expenses

For off-campus expenses, factor in items like:

Rent, food, utilities
Books, supplies, and course materials
Transportation and personal expenses

Plan Ahead for Life After Graduation

Before borrowing, ask: Can I afford this later?

Use these tools:

Use Bureau of Labor Statistics’ website to research your salary. You can even use Nerd Wallet’s article to get an idea of what your federal income tax might be. Then, use Nerd Wallet’s article to estimate your state income tax (if it exists) for the state in which you would want to live. Finally, subtract all the taxes from your salary and indicate your estimated net income.
Use this Cost of Living Calculator to determine the cost of living where you want to live in the future, compared to what your cost of living is now.
Based on where you want to live, research housing options you might take on and consider things like annual rent/mortgage cost, annual utility cost.
Estimate annual expenses for life after graduation in categories such as: housing, fixed bills, food, transportation, personal expenses, etc. Subtract that from your estimated net salary.
Use Bankrate’s Student Loan Calculator to assess the different repayment terms you are considering.
Then ask: Can I manage the estimated loan payment?

Full Process (Application → Repayment Prep)

View details from our Financial Aid Office website here.

Check Eligibility
Double-check the lender’s credit score, income, and cosigner requirements. Confirm that your school is eligible for the lender’s program.

Apply
Gather needed documents such as your Social Security Number, proof of income (like tax returns or pay stubs), proof of enrollment, and the loan amount you need. If you're using a cosigner, collect their information as well. Submit the lender’s online application.

Approval & Certification
Once approved (which may happen instantly), your school will certify your enrollment, cost of attendance, and other aid you’re receiving.

Note - processing of a private loan request from the application to disbursement can take ~ 4-6 weeks, so plan ahead!

Disbursement
Loan funds are sent directly to your school. The school first applies the funds to your tuition and fees. Any remaining funds are refunded to you for other education-related expenses.

Repayment Preparation
Check if the lender requires payments or interest during school. Some lenders defer all payments while you're enrolled, while others expect immediate interest payments. After graduation, review if there’s a grace period before repayment begins. Understand what repayment plans are available such as standard, graduated, or income-based options. Research if the loan offers forbearance or deferment options, or benefits for military, disability, or death. Review any restrictions like penalties for early repayment, rules about multiple payments in a billing period, and payment frequency. Understand all repayment terms to prepare for life after school and avoid surprises.

Look for in-school repayment options:

Do you have to pay the interest on the loan while in school?
Is there a deferment while in school?
Will the lender expect immediate repayment as soon as the loan is disbursed while still in school?

What does post-school repayment look like?

Is there a grace period after graduation where you don’t have to pay?
What sorts of payment plans are there? Income-based, standard, graduated, etc?
Does the loan offer forbearance or temporary payment reduction?
Are there benefits for populations like military veterans?

Under what circumstances can the loan be discharged (disability, death, etc.)?

What restrictions are there on repayment of the loan?

Can you pay more than the pre-determined payment?
Can you pay multiple times throughout a period?
How often are the payments expected to be made?

When taking on private student loans, it’s important to research and fully understand the repayment options available. Carefully read over the terms of each loan as lenders vary in their offerings. Doing this will prepare you for what to expect after graduation.

Other Resources: