Private Student Loans

Upcoming Changes to Student Loans: On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (or OBBBA), which contains many changes to federal financial aid programs that are set to go into place on July 1, 2026. The Law School's Financial Aid Office, in concert with the University Financial Aid Office, continues to monitor updates and will provide additional information on this website as we receive more implementation guidance from the Department of Education. 

Private student loans (also known as alternative loans) are student loans offered by private lenders, including banks, credit unions, and other private organizations. Private student loans can usually be offered to U.S. citizens, nationals, permanent residents, and international students.

Beginning with the 2026-2027 academic year, the University of Chicago has published a preferred lender list for private student loans. You may choose any lender that best meets your needs and requirements in financing your graduate education, including lenders that are not on the University's preferred lender list, as long as you meet the lender's eligibility criteria. 

Federal versus Private Student Loans

The Law Financial Aid Office suggests that students who plan to borrow private student loans carefully compare their options against the Federal Direct Unsubsidized Loan. The Direct Unsubsidized Loan provides a fixed interest rate, multiple repayment options (including based on income), cancellation and forgiveness provisions, deferments, and forbearances. Private student loans may not offer these same options. Students are encouraged to review the differences between the Federal Direct Unsubsidized Loan and private student loans on the Federal Student Aid website or to contact the Financial Aid Office with questions.

Private Student Loan Borrowing Considerations

Unlike the Federal Direct Unsubsidized Loan, private loan terms and conditions are set by the individual lenders. The interest rates for private educational loans can be variable or fixed, and variable loan rates are most often based on a range using SOFR (Secured Overnight Financing Rate) as a base and add an additional percentage based on the borrower's credit. The current SOFR rates are available at the Federal Reserve Bank of New York website.

Before deciding on a lender or loan product, we recommend comparing the terms and conditions of any loans you are interested in and consider the following items:

• Can I prequalify for a loan before finalizing an application? Most lenders on the University's preferred lender list offer prequalification, which is a soft credit check.
• Are there any fees on the loan, either when I borrow the loan or while I am in repayment?
• Can I receive a better rate with a cosigner? If so, can I release the cosigner and how does that process work?
• When will I enter repayment? Can my payments be held (deferred) while in school, if I pursue a clerkship, and anytime during repayment if needed? Are interest-only payments required or optional while I am enrolled?
• How often is the interest capitalized? (The frequency of capitalization will increase the total loan amount that you have to repay because you will be charged interest on a higher principal loan).
• Will the rate formula (interest and fees charged) change during repayment?
• What will my monthly payment be on this loan amount when I am in repayment?
• What kind of borrower benefits does the lender offer? This could include interest rate reductions with automatic withdrawals, principal reduction with a certain number of on-time payments, deferment or forbearance options, cosigner release options, etc.

Sample Eligibility Criteria for a Private Student Loan

Individual lenders will determine specific eligibility criteria for their loan products. Below are some typical criteria lenders may consider. This is not an exhaustive list of eligibility criteria; for information that is specific to you, contact the lender directly.

• Be enrolled for each quarter that you wish to receive funds.
• Be a creditworthy citizen, U.S. national, permanent resident, or other eligible non-citizen of the United States. In most cases, you may apply without a cosigner. However, if not approved, you may wish to add a cosigner.
• Be an international student with an eligible cosigner. The cosigner will usually need to be a creditworthy citizen, national, or permanent resident of the United States who meets the lender’s requirements.

Private Student Loan Amounts and Timelines

The maximum a student may borrow from a private lender is the difference between the cost of attendance and the student's other financial assistance, including scholarships and any federal student loan funding. 

Most private student loan funds are sent to the University via an electronic disbursement method for each applicable quarter and applied directly to your student account. If a private lender sends funds to the University via a paper check made out to the student, the Bursar will contact the student about next steps.

Private student loans are not as flexible as federal student loans when making changes to loan amounts or borrowing allocations during the academic year. Determine your budget and decide on your private loan borrowing needs for the full academic year as much as possible. Some lenders do not allow loan adjustments after the University certified your loan, and a new loan application (potentially with a new credit check) may be required for additional borrowing during the academic year.