Private Loan Programs
The California Western School of Law Financial Aid Office recommends against the use of private loan programs during school, since we consider federal student loan programs to have superior terms and conditions.
Beginning in 2010, students must complete a Private Loan Self-Certification Form in order to receive private education loans. Instructions and more information about the form can be found on a separate page.
Private loans, sometimes referred to as alternative loans or commercial loans, are more expensive than federal loans such as the Stafford or Perkins, and are generally more expensive than the Federal Graduate PLUS Loan.
Private loans are not eligible for:
- Federal deferments
- Repayment options such as Income-Based Repayment
- Public Service Loan Forgiveness
Since the government does not insure or subsidize private loans, lenders usually charge higher fees and/or charge higher interest rates than those of the Stafford program. In addition, private loan lenders require applicants to meet certain credit criteria and may require a cosigner.
The maximum amount that can be requested per academic year varies depending on the specific loan program and the student's remaining eligibility after consideration of all other aid. Under no circumstances are students allowed to borrow more than their Cost of Attendance/Student Budget. It is important to note that most private loan programs have maximum aggregate loan limits.
Private loans usually have a grace period that ranges from six to nine months and commences when the borrower leaves school (withdraws, graduates, etc.) or ceases to be enrolled at least half-time. The interest rates are variable, based on the rate of an index plus an adjustment.
Private loan lenders usually charge a fee at disbursement, deducting the fee from the amount the student receives. Lenders may also charge an additional fee when the loan enters repayment, adding the fee to the loan principal.
Borrowers (and cosigners, if any) must pass the lender's credit check; poor credit may be cause for denial. The law school is not responsible for replacing funds should a student be denied private loans.
Some lenders have created multiple private loan programs for different categories of students. Generally, a lender's loan program designed specifically for law students will have better terms than a program from the same lender which is designed for either all graduates, or else graduates and undergraduates.
Some lenders offer loans which allow a parent or other person to borrow on behalf of a student, taking into account only the borrower's credit, rather than the student's. This can be a solution for a student with an otherwise insurmountable credit problem, but makes the parent or other person responsible for a significant debt burden, which may not be an option for all families.
Read the application and promissory note carefully. The student is responsible for repayment and must keep track of his or her total debt. All information about private loans is subject to change with modifications in the lenders' programs and interest rates.
Bar Loan Programs
Bar loans have similar terms and criteria to private loans. Refer to the promissory note for specific terms. Bar loan funds are disbursed by check directly to the borrower. Read the bar loan applications thoroughly to ensure eligibility. Some lenders require that applicants have a prior loan relationship.
Students should bear in mind that the Financial Aid Office allows a one-time Cost of Attendance increase for costs directly related to the bar exam such as the application fee, moral character fee, exam laptop fee, and MPRE. This can enable the student to obtain federal student aid to cover these direct costs.