Comparing Private Loans and Federal Loans

Private education loans may have significant disadvantages when compared with federal education loans. We strongly encourage you to first borrow any federal loans for which you are eligible. The chart below will help you in understanding the differences between federal and private loan funds.

Comparison Chart of Federal and Private Education Loans*

  Federal Loans Private Loans
Credit Check Required? Direct Loan: No
PLUS/Grad PLUS: Yes (limited)
Yes
Credit Score or Debt-to-Income considered? Direct Loan: No
PLUS/Grad PLUS: No
Yes
Co-Signer Required? Direct Loan: No
PLUS/Grad PLUS:
Usually no
Usually yes
Deferment Options Several options Depends on lender
Grace Period Direct Loan: 6 months Depends on lender
Interest Rate**

Undergraduate –Direct Loan Subsidized/Unsubsidized: 4.45%
Graduate-Direct Loan Unsubsidized: 6.0%
PLUS/Grad PLUS: 7.00%

Usually variable
Loan Fees Direct Loan: 1.066%
PLUS: 4.264%
Depends on lender 
Flexible Repayment options Many options available   Generally none
Loan Forgiveness Options Several options available Generally none
Penalties for Early Repayment None Depends on lender 

Choosing a Private Loan

When choosing a private education loan, you should compare the loan terms offered by several lenders in order to choose the best fit for your situation. When choosing a lender, make sure that Walden University is a participating school in their loan program (www.elmselect.com).

Several points that should be researched when 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 and when are they paid?
  • How will I receive my loan funds?
  • When does repayment begin and is there a grace period?
  • What will my monthly payment be?
  • What will be the total cost if I use the full repayment period?
  • Are there penalties for early repayment?
  • Are there deferment, forbearance, or cancellation options?

Most private loan programs require the Office of Financial Aid to certify your eligibility before approving your loan. If you receive financial aid, you must notify the Office of Financial Aid of any private loans you borrow, as it may affect your aid eligibility.

Truth in Lending Act

Under the Federal Truth in Lending Act (TILA), your lender must provide you with the following documents:

  • The Private Education Loan Applicant Self-Certification Form must be completed and returned to the lender before receiving your first disbursement of loan funds.
  • Federal Direct Loan Disclosure Statement and Right-to-Cancel Period: After you sign your promissory note, the Federal Direct Loan Disclosure Statement confirms the terms and conditions of your loan. At the time that this disclosure is delivered, your "right-to-cancel" period begins. During this period of three to six days, you may cancel the loan by contacting the lender. The lender cannot release the first disbursement of your loan funds until the end of the right-to-cancel period.

Do you have questions about financial aid? If you haven’t yet applied to Walden, please contact an enrollment advisor at 1-866-492-5336 in the United States. If you are a current student, please contact a financial aid advisor at finaid@mail.waldenu.edu or call 1-800-WALDENU (1-800-925-3368).

* Applies to loans first disbursed on or after July 1,2017 through June 30, 2018
** Rates adjust annually

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