If you still have a gap between what you can pay and your financial aid package (including all federal loan options) and you need and can afford to borrow more, you may want to consider a private education loan. Read on to learn more about the process.

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View rates, compare student loans, and apply for a student loan from a Maine lender.

Private Loans 101

Private student loans are credit-based loans offered through banks, credit unions, and state agencies. Usually, the student is the borrower and will need a creditworthy cosigner like a parent or grandparent.

Since federal student loans have many benefits, private student loans should be considered only after other federal financial aid has been exhausted.

FAME developed TheLoanforME.com as Maine’s student loan resource. This website has tools and information to help Maine students and families become more informed about borrowing for higher education, as well as a list of local Maine private student loan options.

Before Taking Out a Private Student Loan

Before you take out a private student loan, be sure to first do the following:

File a FAFSA

File a FAFSA even if you don’t expect to qualify for grants. You may qualify for Federal Direct Loans (need-based subsidized or non-need-based unsubsidized loans). Learn more at FAME’s FAFSA page.

Answer These Questions
  • Have you looked for outside scholarships? If not, look for scholarships.
  • Have you investigated tuition payment plans that can be paid monthly through your school?
  • Who will be the primary borrower – the parent or the student? Should you share the borrowing?
  • Is having the smallest monthly payment the most important aspect to you?
  • Is the lowest interest rate most important?
  • Are low origination fees important?
  • Are tax benefits most important?
  • Are you considering home equity?
  • Do you know if you have a good credit score (myfico.com)?
  • Does the family have other children attending college?
  • What are the short- and long-term goals for both the student and family?
Consider Federal Direct PLUS Loan

Federal Direct PLUS Loans may be a more expensive option, but flexible repayment terms may offset the cost.

Use FAME’s Student Loan Payment Calculator

FAME’s interactive Student Loan Payment Calculator can help you figure out how much you should borrow based on expected future earnings.

Make Payment During School

Consider making payments while you are in school. Making interest-only payments can reduce your monthly payment after you graduate and save you money over the life of your loan.

Choosing a Lender

Research your options and compare private loan features for all the lenders you are considering.

For each lender you’re considering, be sure to understand the answers to these questions:

  • What is the application process?
  • Who is considered an eligible borrower?
  • What are the approval criteria?
  • What are the minimum and maximum borrowing amounts?
  • What are the annual and aggregate borrowing limits?
  • What is the interest rate and is there an interest rate cap?
  • Are the interest rates variable or fixed? If variable, how often do the rates change?
  • Are there application, origination, or other fees?
  • What are the loan repayment terms and borrower benefits, including deferment and repayment options?
  • What are the tax benefits?
  • What are the prepayment penalties, if any?

Comparing Lenders

Families should look for these loan features when comparing student loan options:

Compare Interest Rates

Do your homework — compare interest rates and fees. If a lender is offering a loan without a loan fee or origination fee, is the interest rate higher?

Here are some comparison tables that will help you quickly see differences in some of the student loan options that may be available to you:

Fixed or Variable Interest Rates

Determine whether a fixed or variable rate is a better fit for you and find the lender(s) who offers a rate that suits you. This is a question every borrower must ask him or herself, and there’s no easy answer.

Annual Percentage Rate (APR)

The APR is the cost of interest and fees on a loan expressed over time. The APR is intended to assist you in comparing the cost of various loans that have different fees, rates, and payback periods.

Repayment and Deferment Options

If you need to defer all student loan payments until you finish school or you want to pay interest only, you will need to seek loans that have these options. Some loans may only offer immediate repayment. It’s always good to make sure you have the flexibility to secure a loan deferment because life can change fast.

Quality of Customer Service

When you have questions, how do you want them answered? Personal assistance and online capabilities to get your questions answered in a timely manner are important. Find a lender that provides you the service you expect when you need it.

Lender Experience and Reputation

How long has the lender been in business? Do they have a good reputation?

Loan Resale

Will the lender hold on to your loan or sell it to another group? If it is sold, learn about what loan terms and benefits might change with your new lender. It can be helpful to work with the same lender from application through your loan being paid in full.

Additional Considerations

What benefits or discounts are available for things like loyalty or automatic payments? Are there application, origination, or disbursement fees? Is there a prepayment penalty? Are there other fees such as late payment fees and returned check fees, and when do they occur?

A Maine Lender Can Help

There are many options for private student loans. If you feel that a private student loan makes sense for you, the Maine Private Education Loan Network of lenders can help. The network consists of local Maine lenders that you know and trust.

Maine Private Education Loan Network

  • Bangor Savings Bank
  • Bath Savings
  • Camden National Bank
  • cPort Credit Union
  • Maine State Credit Union
  • Seaboard Federal Credit Union
  • University Credit Union

Maine Loan

The Finance Authority of Maine (FAME) offers Maine Loan which was formerly offered by the Maine Educational Loan Authority.

Lenders may make changes to their information; you should be sure to review the lender’s most recent application disclosure materials.

What Do I Need to Complete an Application?

Here’s what you will need to complete an application. These apply to both the borrower and co-borrower.

  • Social security number
  • Date of birth
  • Phone number
  • Email address
  • Current and prior addresses
  • Monthly income
  • Housing costs
  • Employment information – employer name, address, phone, paystub; if self-employed or higher income, you may need a tax form

Ready to Apply? Find a Maine Lender.

View rates, compare student loans, and apply for a student loan from a Maine lender.