Private Loans

Due to changes to federal loan programs introduced under the One Big Beautiful Bill Act (OBBBA), more students may need to seek private loans to help pay for their education. Private loans can be used to fund educational programs up to a student’s Cost of Attendance (COA), minus other financial aid (including Direct Unsubsidized Loans), for a specific academic year of enrollment. Private loans are offered by lenders such as banks, credit unions, or online financial institutions to help students pay educational expenses. Students may choose to use private loans when federal loans, grants, and scholarships don’t cover their full COA.

Common features of private student loans are:

Since private loans are credit-based, approval may depend on credit history. Students who do not have established credit may need a cosigner.
Interest rates, fees, and repayment options vary by lender and rates can be fixed (stay the same) or variable (fluctuate over time).
Some lenders require payments while the student is still in school, while others allow deferred payment.
Students are often able to borrow up to their full COA.
Small rate reductions are often offered for borrowers who enroll in automatic payments.
Loan terms are often customizable, allowing borrowers to choose length of repayment, payment structure, and type of interest rate.

No matter what type of loan you choose, it is important to do your research and stay educated.

What to Consider Before Applying for a Private Loan

It is highly recommended that students complete the Free Application for Federal Student Aid (FAFSA) and apply for any student financial aid for which they are eligible. Students are encouraged to contact their regional One Stop Student Services Center or Rutgers Health Office of Financial Aid to gain an understanding of their eligibility for all potentially available federal and state funds. Private loans should only be considered after state and federal sources of financial aid have been exhausted.

Direct PLUS Loans are available to parents of dependent students and Graduate PLUS loans are available to graduate students for the 2025-2026 academic year and prior*. As part of the William D. Ford Federal Direct Loan Program, no bank or lender other than the federal government is needed to receive Direct PLUS Loans. As such, Direct PLUS Loans are not subject to commercial market conditions.

Rutgers University offers reasonable no interest tuition payment plans. Before choosing a private educational loan, students should consider whether a payment plan fits their financing needs.

In some instances, a cosigner may be required to apply for a loan. Students should consider whether or not that is feasible.

*Under the One Big Beautiful Bill Act (OBBBA), the option to borrow Grad PLUS loans will be eliminated as of July 1, 2026.
Students who previously borrowed a federal direct loan of any kind while in their current degree program at their current institution, before July 1, 2026, may borrow a Grad PLUS loan for up to three additional academic years or until they complete their degree program, whichever comes first. This continuation applies only for the degree program the student was enrolled in when they borrowed their federal loan. In addition students must still be attending the same institution they were when they first borrowed.
Incoming or continuing students who have not borrowed a Federal Direct Loan of any kind for their current degree program prior to July 1, 2026, continuing students who enroll in a different degree program on or after July 1, 2026, and transfer students, will not retain eligibility for Grad PLUS loans.

What to Consider When Choosing A Lender

For students considering a private educational loan, choosing the right lender is an important decision. The lender they select will remain their financial partner long after their academic program is complete. Students should carefully review and compare all interest rates, terms, and conditions before making a final choice.

Questions to Ask Yourself

Are the interest rates fixed or variable? Look at the range of rates, not just the lowest advertised (which usually requires exceptional credit or a strong cosigner). If variable, what is the lowest rate that can be charged and what is the highest rate that can be charged? If variable, how often is the rate reset and how much notice does the borrower get when the rate will change? Does this impact upcoming payments or are final payments adjusted accordingly?
When do repayments start? Is it immediately while still in school or after graduation? Is there flexibility to change repayment plans in the future?
Is a cosigner required? Do you have a cosigner available and how many on-time payments must be demonstrated to qualify?
Are the fees (origination, application, late payment, returned payment, etc.) reasonable?
Do the loan limits (minimum and maximum borrowing amounts) meet your needs and do you meet the enrollment requirements?
What is the cumulative (aggregate) amount the lender is willing to lend (including any premed loans for medical students)?
What is the impact on long-term financial health? What is the total cost over time factoring in interest? Is the monthly payment amount manageable? What are the possible effects on your credit and your cosigner’s credit?

Questions To Ask Lenders

Consider the following when choosing a lender:

Are there fees charged on the loan? If so, at what percent?
How often is interest capitalized? Does the capitalization change upon entering repayment?
Are there borrower benefits associated with the program? If so, what are they.
What kind of debt management education do you provide?
How long has the company been offering educational loans?
Does the program offer insurance on the loan?

Questions to Ask Your Loan Servicer

Keep the following in mind to discuss later when you are assigned a loan servicer:

How often is a statement provided summarizing loan balances, interest accrual and the expected monthly payment?
How accessible are loan representatives via phone, email, chat, etc.?
What are your hours of operation?
How can payments be made (i.e.,US mail, phone, online) and are there fees associated with any methods?
What kind of debt management education do you provide?

How to Apply for a Private Loan

Start the Application Process

Rutgers has partnered with ELMSelect to offer a tool to help students and families research, compare, and evaluate private loan options from multiple lenders in one convenient place. The tool can also help students select lenders that specialize in their area of study. Click your campus below to get started.

Camden
Use school code 002629/01

New Brunswick
Use school code 002629/00

Newark
Use school code 002629/02

Rutgers Health
Use school code 002629/23

Application Process Overview

Private loans can take longer to process than federal loans due to the requirement to complete multiple disclosure statements as well as the right-to-cancel period required by federal lending laws. Components of the application process are outlined below:

Use the ELMSelect tool for your campus to select your preferred lender and begin their specified application process.
Complete the Application Disclosure Statement provided by your lender. Be sure to ask your lender any questions you have!
Your lender will provide you with a Private Education Loan Applicant Self-Certification form that you are required to complete regarding your understanding of your rights and responsibilities as a borrower. You will need to know your Cost of Attendance and financial aid award status to complete the requirement. Visit the Rutgers financial aid student portal to find both.
Your loan must then be certified by Rutgers. You will receive a Final Loan Disclosure Statement from your lender after your loan is certified.
Your funds will be applied to your term bill, which may result in a refund. The timing of the disbursement of your funds is dependent on several factors including submission and processing of documents required by your lender, the date your application is completed, successful certification, etc.

Glossary of Loan Industry Terms

Accrued Interest: Interest that accumulates on the unpaid principal balance of a loan.

Annual Percentage Rate (APR): The effective interest rate when all finance charges and appropriate up-front fees are included.

Application and Solicitation Disclosure: A required document private lenders must provide at the start of a loan application which outlines the loan’s interest rate, fees, repayment terms, and total cost so borrowers can review key information before applying or agreeing to the loan.

Capitalization: Addition of unpaid interest to the principal balance of a loan, which increases the total outstanding principal.

Cosigner: Usually a parent, guardian or other trusted adult who agrees to share legal responsibility for a private education loan. Their credit history is used to help the student qualify for the loan or receive better interest rates and terms. The loan appears on both the borrower’s and cosigner’s credit report and the cosigner agrees to repay the loan if the student cannot.

Deferment: A period when a borrower who meets certain criteria may suspend loan repayment.

Disbursement: The point at which approved loan funds are released by the lender and applied to a student’s outstanding balance. Any remaining amount will result in a refund to the student to be used for other educational expenses. Private loans can only disburse after all required disclosures are provided, Right-to Cancel and any other waiting periods are over, and loan certification is complete.

Final Disclosure: A document lenders are required to apply after a borrower accepts the loan terms but before the loan is disbursed. It confirms the final interest rate, fees, total cost, and terms of the loan and includes the mandatory Right-to-Cancel Period. The loan cannot be released until this period has passed.

Forbearance: A special arrangement between the borrower and lender (at lender’s option), which may allow the borrower to temporarily stop making payments, obtain an extension for making payments, or make smaller payments than originally scheduled.

Interest Rate: the proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the outstanding loan. Types are either fixed or variable.

Lender: The bank, credit union or other approved entity from which a student can obtain a private loan.

Loan Approval Disclosure: A document that a private lender is required to provide after a loan application is credit-approved, but before it is accepted by the borrower. It includes the specific interest rate, total loan cost, and borrower obligations based on their actual credit evaluation. The borrower must actively accept the terms for the loan process to move forward.

Origination Fee: Initial application processing and/or disbursement fee accessed by the originator or servicing agent.

Private Education Loan Self-Certification Form: A required form that students must complete before receiving a private loan. It helps to ensure that borrowers understand their Cost of Attendance, financial aid received, and the actual amount they need to borrow.

Promissory Note: Contract between a borrower and a lender that includes all the terms and conditions under which the borrower promises to repay loan.

Right-to-Cancel Period: A required 3-day waiting period after a borrower receives the Final Disclosure for a private educational loan. During this time the borrower may cancel the loan with no penalty.

Servicer: An agency which is responsible for collecting the required monthly payment amounts on outstanding loans until they are completely repaid.

Truth in Lending Act (TILA): A federal law that requires lenders to clearly disclose costs, terms, and conditions of credit so borrowers can understand and compare loans before borrowing. It also includes protections for borrowers such as mandatory self-certification and waiting periods to prevent overborrowing.