# Private Education Loans

**Source**: https://college.harvard.edu/financial-aid/how-aid-works/types-aid/parent-loans/private-education-loans
**Parent**: https://college.harvard.edu/resources

## How To Choose a Private Loan Lender

All lenders are not alike. In addition to banks, some educational associations, state education agencies, and other organizations offer student and parent loans for school. Each of these lenders may offer special discounts or services to a student based on the state they live in, the credit rating of the applicant, or even their grade level.

It is important to research and choose the lender that is right for you. Don’t be afraid to ask questions and make sure you take the time to compare what each lender has to offer before making a decision.

As a general rule, students should only consider obtaining a private education loan if they have maxed out their Federal loan options. Parent borrowers should also compare costs with the Federal PLUS loan. The PLUS loan is a federal parent loan and usually has better repayment terms than most private loans.

The fees charged by some lenders can significantly increase the cost of the loan. A loan with a relatively low interest rate but high fees can ultimately cost more than a loan with a higher interest rate and no fees. A good rule of thumb is that 3% to 4% in fees is about the same as a 1% higher interest rate. Lenders rarely give complete details of the terms of the private student loan before the student submits an application, in part because this helps prevent comparisons based on cost.

## Thinking Ahead

- #### What Questions Should I Ask a Potential Lender?

  Here are several points you should research if considering a private loan:

  - What is the interest rate; is it fixed or variable; is the rate capped?
  - What fees must be paid for this loan?
  - When does repayment begin and is there a grace period?
  - What will my monthly payment be?
  - What is the total cost if I use the full repayment period?
  - Are there penalties for early repayment?
  - Are there deferment or forbearance options?
  - Is the loan program well-established?
- #### Where Can I Start?

  There are many different private loan search engines and resources available. One such resource is [University Student Financial Services](https://sfs.harvard.edu/private-loan-options). Keep in mind that this is not a comprehensive list and you are not required to use the lenders shown. In addition, some states have programs for residents so you may want to see if your home state has an education lending authority. Regardless of where you start, always get multiple offers before committing to a specific lender.
- #### The Master Promissory Note

  The Master Promissory Note (MPN) is the legally binding contract that sets the terms and conditions for the loan you are borrowing. An MPN is required for each loan program. MPNs can be used multiple times over a maximum of ten years, meaning you don’t have to sign a new one every year.
- #### Alternatives to Borrowing

  - Outside Awards can help reduce your need for loans. Check our website for our Outside Awards policy and links to resources.
  - Term-time work and summer employment can also reduce the need to borrow. Search our Student Employment Office’s Jobs Database for opportunities.
  - Payment Plans such as the one available through our billing office can lessen the burden of a term bill balance by stretching it out over time.
  - Savings accounts are great for any student. If you already have a job, set aside money each month for education expenses.
- #### Questions/Contact Information

  The Financial Aid Office is committed to assisting you with all your financial aid concerns. Please let us know if we can be helpful in any way. We realize that matters of family finances and financial aid can be complicated, so we hope you will contact us with any questions or problems. Financial Aid Officers are available to speak with students and families by phone or in person about any questions they may have. Please call to speak to an Officer or to make an appointment. You may also email your questions to us.

  Mailing Address: Harvard College Griffin Financial Aid Office, 86 Brattle Street, Cambridge, MA 02138

  Office Hours: Monday to Friday 9-5

  Email: faoinfo@fas.harvard.edu

  Phone: (617) 495-1581