How Private Student Loan Disbursement Works

3 minute read

Navigating the complexities of federal student loans, private and alternative loans, scholarships, and grants can feel overwhelming when figuring out how to pay for college.

After completing the Free Application for Federal Student Aid (FAFSA) to apply for federal aid, you may find you still need to supplement with private or alternative student loans.

What is a Private or Alternative Loan?

Private student loans differ from government-issued federal loans; they are provided by banks, credit unions, and other private lenders instead. For example, NC Assist Loans are provided by College Foundation, Inc., a non-profit organization for students with a North Carolina connection.

This means that students (and parents) who live in North Carolina can use these loans to attend any eligible in-state or out-of-state institution. Likewise, students (and parents) who live in other states but attend a North Carolina school can also apply for an NC Assist Loan.

To help you borrow only what you need, you can use a loan estimator to get an estimate of payments and total interest costs based on the amount you want to borrow.

Applying for Loans and Disbursement Timelines

Most private loan applications take place online. You’ll likely need to provide personal information such as your social security number (and your co-signer’s, if needed), the school you’re attending, and your address.

Certification

The lender will certify your loan. Certification is the process where the lender checks with your school to ensure your information matches their records and that the loan is legitimate. This process usually takes about 7 to 10 days. The school will verify your enrollment status (full-time or part-time), anticipated graduation date, and the requested loan amount.

Acceptance

Once your loan is certified, you’ll need to review and accept the loan's terms, including the interest rate and repayment details. You typically have 30 days from the date of the loan offer to accept it, usually by signing off electronically.

Loans must not exceed the cost of attendance minus any other financial aid you are receiving. The cost of attendance is determined by your school's financial aid office and includes tuition and fees, room and board, books and supplies, transportation, and miscellaneous expenses.

Disbursement

At least three days after your loan is approved, the funds will be disbursed directly to your school based on the dates provided by the institution.

What Happens After Loans Are Disbursed?

Most private student loans are sent directly to your school. Lenders should alert you when your school has received the funds. You should also monitor your student account to see when the student loan credit is applied.

Once the school uses the funds to cover your tuition and fees, any additional funds will be sent to you (the student), based on the school’s policy. This can help cover additional education expenses such as rent or groceries.

Considering Private Loans

If you need a private or alternative student loan, you’ll want to do your homework to ensure you’re getting the best rates and paying the fewest fees. NC Assist Loans are an affordable way to fill the funding gap with no fees and competitive fixed rates.