FINANCIAL AID OFFICE

PRIVATE LOANS

Outline:  Definition   |   Choosing a Lender   |   Questions to ask  |   Federal Aid    |   Additional Resources


What is a private loan?   top

A private loan is a nonfederal loan made by a lender such as a bank, credit union or state agency.  There are many considerations a student and family should take to decide if a private loan is the best option for them.  If you decide to borrow a private loan, always think federal aid first.  Please see Federal Aid Considerations below for more information.


How do I choose a lender? top

Students and parents can use any lender of their choice.  Buffalo State provides a list of recommended lenders as a starting point to assist students and families in the private/alternative loan selection process.  Students and parents have the right to select a lender of their choice and will suffer no penalty for selecting a lender who is not on our list.  Lenders on our list have been selected for the sole benefit of the students attending our institution and have demonstrated a commitment to providing:  competitive loan terms; innovative technology and quick loan processing; flexible repayment options; and the very best in customer service.

Recommended Lenders

We solicited a Request for Information (RFI) from numerous lending institutions and evaluated their responses based on the above criteria to make our selection. To review each lender's completed RFI, refer to the How Lenders Were Chosen page.


Federal Aid Considerations  top

If you decide to borrow always think federal aid first! Complete a FAFSA online at www.fafsa.ed.gov after January 1st each year to take advantage of federal grants and federal Direct Stafford Loans. Federal loans may have more beneficial terms and conditions than private loans which may include more flexible repayment options (standard, graduated, extended, income-based, income-contingent, etc.), deferment and forbearance options,  Public Service Loan Forgiveness (if qualified), Teacher Loan Forgiveness (if qualified), and Loan Discharge (for example due to a total & permanent disability). 

The interest rate on private loans is determined based on the creditworthiness of the student and often requires a co-signer.  As a result the interest rate may be lower than federal Direct Loans for applicants who  have superior credit profiles, or alternatively, much higher than federal Direct Loans for those who have poor credit profiles.  In addition, federal Direct Stafford Loans may be consolidated into a Federal Direct Consolidation Loan which is not credit based; you need not have good credit to qualify.  Private loans cannot be consolidated into a Federal Direct Consolidation Loan, resulting in multiple loan payments upon graduation for students who have opted to borrow private loans, especially for those who choose to borrow from more than one lender.  Therefore, it is important to consider many factors in addition to the interest rate and do your research before choosing which loan is right for you. 



Questions to Ask Private Lenders  top

If you have already taken advantage of federal grants and loans and still find the need for funds keep in mind the following tips and guidelines when selecting a lender. Always borrow conservatively and only borrow what you need. The choice of a lender is your personal decision. We strongly urge you to do your research and ask the following questions when selecting a lender:
  • What is the interest rate on the loan?  Is it variable or fixed? 
  • Will I need a co-signer?
  • What fees are associated with taking the loan (is there an origination or backend fee)?
  • Will funds be disbursed electronically or by a paper check that I will need to sign?
  • When does interest begin accruing and when does repayment begin? 
  • What will my estimated monthly payment amount be?
  • What repayment options are available to me?
  • If I am having difficulty making payments, what options do I have?
  • How long has the lender been in business?
  • Does the lender service its loans or are they sold to another lender or servicer once the loan has been disbursed to me?
  • If applying at a credit union, do I have to be a member?
 
Additional Helpful Information  top