Over the past twenty years, the cost of a college education has skyrocketed. As a result, the national student loan debt toll has climbed to over 1.5 trillion dollars — and it only continues to rise. The average American would have a difficult time trying to pay for college out-of-pocket. This leaves many students turning to student loans to cover the gap.
While federal student loans are the best option for most borrowers, the amount that an undergraduate student can borrow is limited to just $57,500 for all four years of college. Even if a student attends a less expensive public university, this amount may not be enough to pay the full tuition, room and board, and expenses. Students can then look to private student loans.
Private student loans are offered by banks and other lenders and are based on the creditworthiness of the borrower. In addition, these loans are often available in amounts up to the full cost of attending college. However, the interest rates on these loans tend to be higher and they often come with less benefits and protections, so borrowers should be careful to shop around to get the best deal possible.
How Long Does the Private Student Loan Application Process Take?
For most private student loans, the application process is relatively straightforward and can take as little as ten minutes. Most lenders require basic information in order to process a loan application. This includes Social Security numbers for the borrower and any co-signer, personal information (such as telephone numbers, dates of birth and addresses, financial information, tax returns, employment information, an income statement), and a personal reference.
Once you have this information gathered, the application can be completed online. Generally, it is a quick process, as the forms are automated, and it is a relatively simple matter of inputting and uploading the necessary information. Many lenders advertise that a decision will be provided within minutes. This typically means that if your loan is denied, you will be told immediately. If your loan is approved, you might get an initial notification followed by a secondary review to confirm eligibility for a private student loan.
When Will the Money Be Disbursed?
Funds for a private student loan are typically disbursed anywhere from two weeks to two months after your loan is approved. Most private student loans must be certified by your college or university to verify the loan amount. This adds another step to the process, and can lengthen the amount of time it takes for the funds to be released.
The loan proceeds will then be sent directly to your college or university. If you borrowed over and above the amount of tuition and other fees to cover your other expenses, then you will receive the extra funds from your school. It usually takes another week to two weeks for these funds to be disbursed to you.
Overall, from the date that the loan is approved, borrowers should expect it to take anywhere from two to ten weeks for the funds from the student loan to be released. For this reason, if you need a student loan to pay for college, you should not wait until the last minute to apply.
Finally, be sure to shop around for a good deal when looking for private student loans. The difference in a single interest rate percentage point on a loan can mean thousands of dollars over the life of a loan. For this reason, even if you are in a hurry to get student loan funds, it makes good financial sense to take your time and look for the best possible deal.