If you still have a gap between what you can pay and your financial aid package (including all federal loan options) and you can afford to borrow more, you may want to consider a private education loan.
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:
File the Free Application for Federal Student Aid (FAFSA)
File your 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).
Ask yourself the following questions to help you determine the next step.
Has the student 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)?
Do you have other children attending college?
What are the short and long term goals for both the student and family?
If your parent prefers to borrow an education loan on your behalf, consider the Federal Direct PLUS loan.
Research your options and compare private loan features.
What is the application process?
Who is considered an eligible borrower?
What are the approval criteria?
What are the individual loan and aggregate borrowing limits?
What are the interest rates, interest caps, loan and origination fees?
What are the loan repayment terms and borrower benefits, including deferment and repayment options?
What are the tax benefits?i
What are the pre-payment penalties?
Use FAME’s Student Loan Payment Calculator to make sure you can afford to repay what you will be borrowing.
FAME’s interactive Student Loan Payment Calculator can help you figure out how much you should borrow based on expected future earnings.
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.
Private Student Loan Options
The following list includes just some of the private loans available from Maine lenders. Your financial aid office may also have a list.
Maine Private Education Loan Network
Other Maine Lenders
The Finance Authority of Maine (FAME) offers two loans that were 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.