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

Comparison Chart of Federal and Private Education Loans

 Topic Federal Direct 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 Loans: 6 months Depends on lender
Interest Rate*

Undergraduate Subsidized and Unsubsidized Direct Loans:
• Disbursed on or after July 1, 2019 and before July 1, 2020 are fixed at 4.53%
• Disbursed on or after July 1, 2020 and before July 1, 2021 are fixed at 2.75%

Graduate Unsubsidized Direct Loans:
• Disbursed on or after July 1, 2019 and before July 1, 2020 are fixed at 6.08%
• Disbursed on or after July 1, 2020 and before July 1, 2021 are fixed at 4.30%

Direct PLUS Loans (Parent and Graduate/Professional):
• Disbursed on or after July 1, 2019 and before July 1, 2020 are fixed at 7.08%
• Disbursed on or after July 1, 2020 and before July 1, 2021 are fixed at 5.30%

Usually variable
Loan Fees* Subsidized and Unsubsidized Direct Loans:
• Disbursed on or after October 1, 2018 and before October 1, 2019 is 1.062%
• Disbursed on or after October 1, 2019 and before October 1, 2020 is 1.059%

Direct PLUS Loans (Parent and Graduate/Professional):
• Disbursed on or after October 1, 2018 and before October 1, 2019 is 4.248%
• Disbursed on or after October 1, 2019 and before October 1, 2020 is 4.236%
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 

* Rates Adjust Annually

Choosing a Private Education Loan

When choosing a private education loan, students should compare the loan terms offered by several lenders in order to choose the best fit for their situation. When choosing a lender, borrowers should 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 education 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 education loan programs require the Office of Financial Aid to certify a student’s eligibility before approving the loan. If students receive financial aid, they must notify the Office of Financial Aid of any private education loans they borrow, as it may affect aid eligibility.

Truth in Lending Act

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

  • Private Education Loan Applicant Self-Certification Form: Students must complete this form and return it to the lender before receiving their first disbursement of loan funds.
  • Private Education Loan Right-to-Cancel Period: After the student signs the promissory note, the private lender will deliver a disclosure statement to confirm the terms and conditions of the private education loan. At the time that this disclosure is delivered, the "right-to-cancel" period begins. The student may cancel a private education loan, without penalty, until midnight of the third business day following the date on which the student receives the disclosure. The student may cancel the loan by contacting the lender. The lender cannot release the first disbursement of the 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 specialist at 855-646-5286 in the United States. If you are a current student, please contact a financial aid advisor at [email protected] or call 1-800-WALDENU (1-800-925-3368).

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