How Private Student Loan Disbursement Works

4 minute read

Navigating federal student loans, private and alternative loans, scholarships, and grants — it can all feel overwhelming! But if you’re looking for ways to pay for college, we’re here to help break it down for you.

After you’ve completed the Free Application for Federal Student Aid (FAFSA) to apply for financial aid in the form of federal student loans, scholarships, grants, and work-study programs, it’s possible you will need to supplement with private or alternative student loans. In this post, we take a closer look at private student loan disbursement specifically; and demystify how it works.

What is a private or alternative loan?

Unlike federal student loans, which are issued by the government, private or alternative student loans come from banks, financial institutions, or other entities. For example, NC Assist Loans are provided by College Foundation, Inc., a nonprofit organization for students with a North Carolina connection. This means that students (and parents) who live in North Carolina can use the loans to attend any in-state or out-of-state eligible institution. Likewise, students (and parents) who live in other states and have a student who attends a North Carolina school can also apply for an NC Assist Loan.

To help you borrow only as much as you need for school, you can use a loan estimator, which can provide you an estimate of loan payments and the total interest cost based on the amount you would like to borrow. The estimator allows you to input various loan amounts and interest rates to see the changes in estimated payments and total costs. 

Applying for loans and disbursement timelines.

Most application processes for private loans take place online. You’ll likely need to provide some personal information such as your social security number (and your co-signer’s if you need one), the school you’re attending, your address, and other requested information.

To continue the private student loan disbursement journey, the lender will certify your loan. Certification is the process of the lender checking with the school to ensure your information matches their records and the need for the loan is legitimate. This process usually takes about 7 to 10 days. At that time, the school will check your enrollment status, including whether you will attend full-time or part-time. Other details will be verified, like an anticipated graduation date and the loan amount.

Once you have applied and your loan is certified, you’ll need to review and accept the terms of the loan, such as interest rate and repayment details. You will typically have 30 days from the date of the loan offer to accept it. Most loans provide the option to sign off on the terms electronically, so no printing or mailing is involved.

Loans must not exceed the cost of attendance minus other financial aid you are receiving. The cost of attendance is determined by the financial aid office of your school and defined as the total cost of education, including tuition and fees, room and board, an allowance for books and supplies, transportation, and miscellaneous expenses.

Then, 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 school.

What’s happens after loans are disbursed?

So, what happens after your private student loan disbursement? Most private student loans are sent directly to your school. Lenders should alert you when your school has received your loan. You should also keep an eye on your student account, so you can see the student loan credit when it’s applied.

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

Considering private loans

If you’re in the market for a private or alternative student loan, you’ll want to do your homework to make sure you’re getting the best rates and paying the least amount of fees. NC Assist Loans are an affordable and trusted way to fill the funding gap.

We do not charge fees and have competitive fixed rates. You can even reduce your interest rate by 0.25% with auto-draft while in the repayment phase of your loan. Applying for an NC Assist Loan is an easy online process you can complete now or in the future if you need a little extra to help pay for college.