Financial Aid - Other Loan Options
The Financial Aid Office recommends that students first apply for financial aid by filing the Free Application for Federal Student Aid (FAFSA). Filing the FAFSA will automatically allow students to be considered for federal student loans. We suggest that students utilize all of their federal loan options before pursuing a private educational loan.
Private loans are designed specifically for students and offer competitive variable or fixed rates. Loan approval is based on a student's overall credit profile. A co-signer is recommended and may be required.
The first step in borrowing a private loan is to apply with a lender. There are many things to consider when choosing a lender. The link above provides information for unaffiliated lenders that we have determined provide students with funding stability, competitive interest rates, borrowing options for non-traditional students and electronic funds transfer capability. The lenders noted therein are not endorsed by St. Thomas. Furthermore, St. Thomas does not guarantee the lenders listed will provide the best borrower benefits to you. Remember, St. Thomas will process a private loan from any lender you choose, but it is your responsibility to research the options available to you.
Federal regulations require lenders to provide multiple loan disclosures, a Self Certification Form and a fixed rescind period. These regulations add significant time to loan processing and disbursement, so allow plenty of time when considering private loan options.
Some lenders require students make Satisfactory Academic Progress as defined by the Department of Education, be enrolled at least half-time (6 credits each semester), or be currently enrolled. If you have been notified or have reason to believe that you are not meeting any of these requirements, please contact the lender before submitting an application to determine if you are eligible for their loan program.
Federal Direct PLUS Loans are available to parents who want to borrow funds on behalf of their dependent child to pay education expenses. undergraduate who is enrolled at least half-time basis (6 or more credits each semester).
This loan cannot be used to pay past-due balances from a prior term and must be processed during a term the student is currently enrolled on a half-time basis. A credit check is required and performed by the U.S. Department of Education. The interest rate on the Federal Direct PLUS loan is 7.54%. This is a fixed interest rate for loans disbursed on or after July 1, 2022 through June 30, 2023 and is effective for the life of the loan. Students are required to have a current Free Application for Federal Student Aid (FAFSA) on file before their parent may apply for a Federal Direct PLUS Loan.
There is a federal loan origination fee of 4.228%. This fee is deducted from each disbursement.
Eligibility is limited to the cost of attendance (as determined by St. Thomas) minus any other financial aid the student is receiving.
Repayment will begin 60 days after disbursement of the full amount of the loan. Interest accrues as soon as the first disbursement is made. There is no grace period for this loan; the parent borrower repays both principal and interest while their student is in school. The repayment term will be 10 to 30 years depending upon the repayment plan that is selected. Parents have the option to defer payments for PLUS loans that were originated after July 1, 2008, provided the designated student is enrolled at least half-time each semester (six or more credits).
Information about the federal loan servicer is sent to the borrower after the first disbursement of the loan or can be found using the National Student Loan Data System (NSLDS). The borrower's FSA ID is required to log in to this database and view the Aid Summary. A student's federal loan servicer is listed in the right margin. Contact information for all federal loan servicers can be found in the federal loan servicer directory.
Attention Parent Borrowers: If you have recently frozen your credit report at Equifax, Transunion or Experian you may need to unfreeze your information before applying for a Direct PLUS Loan for Parents. A credit check is a required part of the Direct PLUS Loan Request or the Endorser Addendum process. As such, a borrower or endorser must remove any active credit freeze before starting the PLUS application or Endorser Addendum. Unfortunately, Federal Student Aid and the University of St. Thomas cannot unfreeze a credit report for the applicant.
Please note that Federal Student Aid uses credit reports from two of the three main credit bureaus (currently Equifax and TransUnion). If your credit report is frozen at only one credit bureau, it is possible a credit determination could be made using the secondary credit bureau.
The decision of whether or not to borrow additional loans and which program to use is a difficult one for some families. Before making the decision, the Undergraduate Financial Aid Office encourages families to consider the differences between the Federal Direct PLUS Loan and private loans.
Private loans for students have similar terms and conditions. However, there can also be important differences that may affect the overall cost of borrowing. It can literally pay to get started early by comparing lenders and determining the loan attributes that matter most to you.
Some lenders offer private loans for parents, family members or other individuals to help pay for a student’s education. Consider this fairly new borrowing option carefully, as only the parent or third party is responsible for repaying the loan. Compare repayment terms, postponement options and the cost to borrow along with the lender’s stability and reputation.