Alternative Lending/Private Loans

Federal loan regulations require a school that participates in a preferred lender agreement to disclose their method of selecting the lenders included on their list of suggested lenders. Information below is provided to borrowers to disclose the method used to create Misericordia's Preferred Lender List.

According to Section 682.212 of the Federal Register, published by the Department of Education, "A school may, at its option, make available a list of recommended or suggested lenders, in print or any other medium or form, for use by the school's students or their parents, provided such list--

• Is not used to deny or otherwise impede a borrower's choice of lender

• Does not contain fewer than three lenders that are not affiliated with each other

• Does not include lenders that have offered, or have offered in response to a solicitation by the school, financial or other benefits to the school in exchange for inclusion on the list or any promise that a certain number of loan applications will be sent to the lender by the school or its students" (U.S. Department of Education, 2007).

A Preferred Lender List provides a comparison of selected lenders in relatively consistent terms, reducing confusion and assisting students and their families in making the best-informed borrowing decisions.  We recommend that you research your options carefully when considering a private loan. 

Steps Taken and Criteria Used to Select Lenders

Lenders are welcome to submit information on their products and services via a standard Request for Information (RFI) to the Student Financial Services Offices for each academic year. The questions included in the RFI address the following topics:

Loan Fees Interest Rate Information Deferment Options Grace Period Past Due Balances

Repayment Terms and Options Up-Front Borrower Benefits Percentage of Borrowers Who Qualify for Benefits Borrowing Limits Eligibility Requirements

 

Borrower Benefits Lenders are evaluated based of their offering of benefits to borrowers, such as competitive interest rates and terms, payment of origination fees on behalf of the borrower, availability of repayment options, and back-end borrower benefits (i.e. principal reduction, interest rate reduction, etc.)

Quality of Lender Products and Services Criteria used to evaluate each lender includes the following:

• Ease of application process
• Web-based application and services
• Timely and responsive processing of loans including resolving issues
• Consistent, timely, and accurate customer service
• Lenders practice to recommend students to maximize Federal financial aid first
• Lender Stability (Number of years in the student loan business, source of stability of the capital used, reputation, default rates)

With regulatory changes and market instability affecting lenders' decisions to remain in the student loan industry, it was important to select lenders who are reliable and will continue to service borrowers for future years.

Misericordia retains the right to maintain and alter it's preferred lender list at any time and to select lenders that consistently provide competitive products, along with responsible actions and policies that best serve our students.

The federal Truth In Lending Act requires lenders to obtain a signed and completed Private Education Loan Applicant Self-Certification Form in order to disburse a private education loan. If your lender does not provide the form, print and complete the form below:

Private Education Loan Applicant Self-Certification Form

Q: Am I obligated to use one of the "preferred" lenders? 

A: No. Students and their families do not have to borrow from a lender on the list. Borrowers have the right to select any lender. If you have an existing banking relationship, you should compare your bank's student loan offerings to those of the preferred lenders.  It is the responsibility of each borrower and their cosigner to evaluate the eligibility requirements, costs, and benefits associated with each lender before applying and borrowing a private loan.

 

Q: Are ISAs loans?

A:  ISAs are real obligations though they are different than loans. They do not have a fixed principal amount or an interest rate. Rather, students commit to paying a fixed percentage of their earned income after graduation. Unlike a private loan, there is no guaranteed amount of money that a student will pay monthly or total during the life of an ISA, as this will vary with earned income.

Q: What are the key risks of an ISA?

A: ISAs have a fixed income percentage which means that you will pay less in months where you earn less and more in months where you earn more. This means that you could pay more or less than your funding amount, and more or less than you would with a loan if you enter into an ISA.

Q: Will an ISA affect my financial aid?

A: In most cases, no. ISAs are treated like private student loans and are generally available up to the full cost of attendance of your program, subject to maximums put in place by each ISA provider.

Q: Will my ISA funding be paid directly to me?

A: No. Just like private student loans, your ISA funding will be paid to Misericordia directly by your ISA provider on your behalf.

Q: Are there any eligibility requirements?

A: Each provider will have different requirements to be eligible for an ISA. Many providers will consider your degree program, the portion of your degree already completed, your citizenship, and your GPA or academic progress. You should review the specific eligibility requirements for your ISA provider should you choose to apply for an ISA.