SunTrust understands how overwhelming paying for college can be.
Before taking out a private student loan, or if you have one already, it's important to clearly understand all aspects of the loan and its repayment requirements.
With the information below, let us help you understand the basics. And if you're still confused, don't be afraid to call us.
Private vs. Federal Student Loans: Do you know the difference?
Private Student Loans
Offered by private lenders like SunTrust, private student loans can help bridge the gap between the cost of a college education and the financial aid received from federal student loans, scholarships and grants. SunTrust recommends students compare all aid alternatives prior to applying for private student loans.
- SunTrust offers the Custom Choice Loan, for graduate and undergraduate level students and the Graduate Business School Loan, for graduate level business students.
- Key differences between the Custom Choice Loan and the Graduate Business School Loan.
Federal Student Loans
Federal Student Loans are funded by the federal government and offered to students and parents.
- Compare federal and private student loans.
- Direct Loans are low-interest loans made to students for the cost of education, minus any financial aid. Eligibility for these loans is not based on credit history.
- PLUS Loans are made by the federal government and allow parents and graduate students to borrow money up to the cost of education, minus any financial aid. Financial need is not a requirement, but credit history is used to determine eligibility.
Before you apply for a private student loan
Anyone considering a private student loan should understand all aspects of the loan, the application process and its repayment requirements. Many of the following questions may be under consideration
What is credit history and why is it important?
As part of the private student loan application process, a lender will review the credit history of the student and cosigner (if applicable). Familiarity with an individual's credit report will help a consumer understand their personal credit history.
- A credit report is a detailed list of an individual's credit history, including any loans and credit cards, payment history and credit ("FICO") score; lenders use this information when evaluating a request for credit, including requests for a private student loan
- To help manage debt, as well as protect against identity theft, it is recommended that all consumers read their credit report at least once a year
- Consumers are entitled to a free credit report every 12 months from three nationwide consumer credit bureaus which can be requested at annualcreditreport.com or 877.FACTACT (877.322.8228)
Will a cosigner be needed?
- Many students need a creditworthy cosigner to qualify for a private student loan
- Some lenders, including SunTrust, offer an option to release a cosigner from the loan after certain criteria have been met; this criteria is determined by the lender
Do I have to make payments during school?
- Most lenders, including SunTrust, allow private student loans to be deferred while students are enrolled at least half-time or more
- The length of deferment can often be capped this criteria is determined by the lender
- Some students choose to make payments while in school to help save on the total loan cost; click here for a description of the benefits of paying interest while in school
What kind of interest rate is available on a private student loan?
- Interest rates are based on credit history and vary by lender and loan program
- Many private student loans offer a choice between a variable or fixed interest rate this is true of the loans SunTrust offers
- Variable interest rates change monthly or quarterly which means monthly payments can increase or decrease as the rate changes
- Fixed interest rate loans have a set interest rate for the life of the loan
What, if any, fees apply to a private student loan?
- Since fees can significantly add to the total cost of a private student loan it's important for borrowers to understand what fees are charged by the lender
- Private student loans may have origination fees based on credit history and/or repayment fees that will be added to the loan balance once the loan enters repayment (SunTrust does not charge origination or repayment fees on its private student loans)
- As with many types of loans, not just private student loans, late fees are charged if a payment is made after the due date
Do private student loans offer borrowers any special features or benefits?
- Some lenders, including SunTrust, offer "borrower benefits" that may lower the overall cost of the loan. For example, the interest rate could be reduced if monthly payments are automatically drafted from a bank account during repayment
- Each lender is different it's important to check which lender offers the best benefits
Navigating the private student loan process can be difficult. SunTrust is here to help.
What's the Loan Process for a Private Student Loan?
To begin, lenders will require the student and cosigner, if applicable, to complete a loan application. After the application is submitted, the lender will review a credit report of all applicants. A cosigner is not always required, but most students, especially those without a substantial credit history, may need a creditworthy cosigner to qualify.
Upon Approval for a Private Student Loan
Upon passing the initial credit review, there are multiple steps before funds are disbursed for a private student loan and the loan process can vary by lender. With SunTrust, here's a general overview of what to expect
- Loan options are presented online - SunTrust offers multiple options including choice of interest rate type (fixed or variable), repayment plans, including a choice to defer while in school and repayment terms
- Loan documentation - applicants must submit required loan documentation (this may include verification of income, proof of identification, etc.)
- Approval Disclosure - this is a disclosure sent to all applicants outlining the terms of the loan and is generally sent before school certification is requested
- School Certification - certification of the loan by the school is required ; this certification is requested by SunTrust and ensures that the student is enrolled at least half time, that the loan amount is appropriate for the cost of attendance at the school, and specifies when the loan will be disbursed
- Final Disclosure - after school certification is received, final loan terms will be outlined in a Final Disclosure which allows applicants the opportunity to cancel or rescind the loan
- Loan Disbursement - amounts and timing of when a private student loan is disbursed is generally dictated by the school; funds are sent to the school, applied to the student's account and any overage of funds above/beyond what is owed to the school, is handled between the school and student
What are a private student loan borrower's responsibilities?
The promissory note or credit agreement explains all borrower and cosigner obligations. Among them are the following:
- Private student loan borrowers, and their cosigners, if applicable, are responsible for paying back the loan, even if the student borrower doesn't complete coursework, graduate from college or cannot find a job after graduating
- Private student loan borrowers and their cosigners must notify the lender or servicer if:
- There is a change in name, address, phone number or Social Security number
- The student drops below half-time enrollment status
- The student graduates, withdraws or transfers to another school
- Scheduled loan payments cannot be made as scheduled
- Loan repayment needs to be delayed or put on hold with a deferment
- The student or cosigner becomes an active service member within the military
- In addition, borrowers and cosigners should open and read all mail related to any student loan
How do private student loan borrowers know when payments are due, how much is owed, where to send payments, etc.?
- Most private loan lenders provide secure online access to loan information
- SunTrust private student loan information
How long do I have to repay a private student loan?
- Repayment terms are usually set by the lender and range from 5 to 25 years
- Some lenders offer you the option to choose the repayment term
- In general, a longer repayment term may allow for a lower monthly payment; however, the overall cost will be higher due to the interest being charged
Are deferment options available?
- Deferment options vary by lender and loan program
- If the loan offers the ability to defer payments while in school, interest will accrue during any period of deferment and the loan balance will be higher when repayment starts
- If interest payments can be afforded while in school and/or during the grace period, it is wise to do so; this will reduce the total loan cost
How do I make payments on a private student loan?
- Many lenders partner with loan servicers to manage private student loans after the loan proceeds have been disbursed. Servicers process payments and deferment requests, and maintain all records and files
- Shortly before a first loan payment is due, borrowers should receive information from the loan servicer with monthly payment information (amount due, date due and where to send the payment)
- It is very important to inform the lender and servicer of any changes in address, phone number and/or enrollment status
What happens if I miss a payment?
- If a payment is missed, additional charges such as late fees may be charged
- Missing a payment will cause a loan to be delinquent.
- Missing multiple payments for specified period of time will cause a loan to be in default (more information on this can be found in the promissory note or credit agreement)
No matter what stage you're at in planning for a college education, you'll need to determine how much you need to save, estimate the cost of college and analyze financing needs for each year of college. Calculators can help determine how much to save or borrow for college and then how much extra is needed.
- Funding Analysis Calculator
- Education Budget Calculator - helps to figure out annual costs for college
- What Will It Take To Save For College? - calculates college expenses and the future cost of tuition
- How Much Should I Budget For College Living Expenses? - helps to budget one year's living expenses for college
- Is A College Meal Plan A Good Deal? - helps determine the average cost per meal for a meal plan
- Should I Live On Campus, Off Campus Or At Home? - abudget/compare costs of different living arrangements while attending college
- What Expenses Do I Face Prior To Attending College? - helps budget for expenses related to the cost of getting ready to attend college
- What Investments Can I Use To Save For College? - explains some of the options to save for college based on income, tax filing status, and intended savings
Other popular resources
If you are having trouble paying your loans, there are options.
Work on a solution with our servicer, AES.
American Education Services (AES) is the servicer for SunTrust private student loans which means AES manages repayment relief options, deferment requests and inquiries from current SunTrust private student loan holders. When borrowers need payment relief, AES is a great resource they work with borrowers all day long to help find a solution, and they can help you, too.
Options that could help
- Don't wait until student loan payments are several months behind.
Contact AES as soon as possible. Explore helpful information at the AES website, www.youcandealwithit.com, or call them at 800.233.0557
- Apply for a deferment or forbearance
Popular reasons why many students need a deferment or forbearance include going back to school, financial hardship, military service, etc.
- Consider an alternative repayment plan
You may qualify for an alternative repayment plan which allows borrowers to pay interest only for periods of time (such as 12-24 months). Interest continues to accrue during this time and the principal loan balance will increase, but an alternative repayment plan may help avoid further difficulties.
- Student Loan forgiveness
In the event of an unfortunate circumstance involving death or total and permanent disability of the student, loan forgiveness is an option. Loan forgiveness, however, does not apply in the event of death or total and permanent disability of the cosigner