How long does it take for a private student loan to be approved?

The amount of time it takes for a private student loan to be approved can depend on multiple factors. While you typically have to submit the application for federal student loans - the Free Application for Federal Student Aid (FAFSA) - months in advance, private student loans work differently. The application process for private loans is usually faster, and you can receive an approval in as little as a few days. Read on to learn more about the timeline for private student loans, the steps involved and what factors impact the time for approval.

What are the steps in the private student loan approval process?

Although the specific steps and timelines will vary by lender, most private student loans follow this process:

1. Application submission

To obtain a private student loan, you must fill out an application. Usually, the application is available online. You must enter your personal details, including your Social Security number, the name of the institution you'll be attending and how much money you'll be borrowing.

If you plan on applying with a cosigner, most lenders will allow you to add their name and contact information. The cosigner will have to submit an application too.

2. Credit check and initial review

The lender will ask for you to consent to a credit check. If you don't have good credit, a long credit history or a steady source of income, the application will allow you to add a cosigner. A cosigner is an adult - usually a parent or relative - with good credit and a reliable source of income who agrees to make payments if the student doesn't keep up with repayment.

Having a cosigner decreases the lender's risk, so the lender is more likely to approve your application and give you more competitive rates.

3. Loan offer and acceptance

After reviewing the application, the lender will give you a preliminary loan offer. You may be able to choose from several term options - such as five, 10 or 15 years - and multiple repayment options. The options you choose will affect your annual percentage rate (APR) and overall repayment cost.

When the lender sends you the details, it will also give you instructions and a timeframe for when you need to accept the loan. For example, you may have 30 days to review and accept the loan. After that, you may have to start the process over, and the rates may be different.

4. School certification process

If you accept the loan, you'll notify the lender to let them know you'd like to proceed. Then, the lender will begin the school certification process. The lender will contact your college or university to confirm your program and enrollment status. The maximum amount you can borrow is typically based on your school's cost of attendance, so this process can also affect how much you can take out in loans.

The school certification process is often the longest step; it can take several weeks for some colleges to confirm the loan as they are processing hundreds of certifications.

5. Final approval and loan disbursement

Once the school certifies the loan, the lender will handle the final approval and loan disbursement. Typically the lender will issue the loan to the college based on the disbursement date selected by the college. This could be within several days and up to a few weeks.

If there is money left over, the school will usually send the remainder to your student account, or you may receive a refund as a check. As a student loan borrower, you can send the money back to the lender to reduce the principal amount of the loan and ultimately lower the interest you'll have to pay over the lifetime of the loan.

How long does the student loan application process take?

The specific timeline varies by school and lender. In general, the entire application process can take anywhere from one to eight weeks. Issues pulling your credit report, missing documents and a slow response from the college can delay your application.

Tips to speed up the student loan approval process

To speed up the student loan approval process, follow these tips:

• Double check your documents: When you apply for a student loan, the lender will ask for documents like proof of income. Ensure that you submit all of the required documents and that any electronic versions are clear and easy to read.
• Consider adding a cosigner: A cosigner with good credit and a reliable source of income can improve your chances of getting a loan.
• Be responsive: The lender may reach out to you for additional documentation, to ask questions and to request you to accept the loan terms. Respond quickly to any emails or phone calls and provide the necessary information to expedite the process.
• Check with your school: If the loan is taking longer than expected, follow up with the school financial aid office to ensure they received the loan information.

Understanding the private student loan approval timeline

Private student loans can play an important role in financing your education, but it's important to pay attention to timelines and plan ahead. If you need to take out a private loan, be sure to apply at least two months in advance to ensure you have enough time to pay your tuition when it's due. Applying early helps prevent any headaches and unnecessary stress.