Uncertified student loans, also known as direct-to-consumer student loans, are private education loans that don’t have to be verified by your college in order to get an approval.
Most private education loans require a school official to “certify” that the amount of the loan does not go over what is your cost of attendance minus any financial aid that is in place.
Uncertified student loans don’t have this requirement in place, and can therefore be applied for without your college ever having to know that you are seeking additional aid in the form of a private student loan.
Availability
Most private college loans are in-fact certified student loans, and thus finding an uncertified student loan can be real a headache. Before the economy tanked and the credit markets tightened significantly a few years ago the prevalence of these uncertified student loans was much higher. Private lenders were offering loans directly to students without hesitation as long as they could provide the appropriate credentials in terms of credit.
Without paying attention to whether or not the student was utilizing the proceeds of their loan towards education-related expenses, the lenders of uncertified student loans could increase their volume and overall profits. One of the problems was of course when students began taking out private student loans for reasons other than to pay for their tuition, and other college expenses. This put students in greater amounts of debt than was necessary to finance their higher education, and ultimately contributed to decreasing availability of these types of private education loans.
When the credit-crunch took effect and the economy began to weaken, many of the lenders that were making these uncertified student loans went belly-up, and the lenders that were leftover realized that it may have been a mistake to offer students such easy access to private money. Private lenders that provide uncertified student loans are now in the minority, and if you are looking for a loan of this caliber you are going to have to filter out the majority of private student loan lenders, as most private education loans are now certified.
Finding a Lender
Two of the uncertified student loan lenders that have been known to survive the credit and economic meltdown of 2008 are Chase, and Wells Fargo. These two lenders may still be able to provide you with private loans that don’t require any type of certification by your college.
Other smaller private lenders may still be in existence, but you are going to have to do some serious digging in order to find these uncertified student loan lenders.
Most private student loan lenders will state explicitly on their website whether or not their loan needs to be school-certified or not. Be careful to not fall for the advertising campaigns of some payday loan, and less-scrupulous personal loan lenders, as they will go ahead and advertise that their product does not have to be school-certified, when in-fact it is not a private student loan at all, and is rather some other kind of loan instrument.
Getting Approved and Receiving Your Money
Uncertified student loans are roughly the same as most private education loans in that they are based mostly on credit. This means that you will have to have the appropriate credit score, and credit history in place in order to get an approval. The only exception to this is if you can provide a creditworthy cosigner that is willing to cosign for your loan. The only way you can get these student loans without a cosigner is if you have the appropriate credentials in terms of credit, and most likely income in place, however most students require a cosigner to get an approval
The proceeds of your uncertified student loan should be sent directly to your place of residence upon being approved. The money from your loan does not have to go through your school before you are able to gain access to it, and most of the time a check is sent directly to the address you provided during the filling out of your loan application within about a couple of weeks of approval.
Conclusion
Uncertified student loans are not much different than most private education loans other than the fact that they don’t require school certification. Due to a fairly high level of abuse, and a tightening of the credit markets, the availability of these types of student loans has decreased dramatically over the past few years, and it is therefore going to be difficult to locate a lender that can provide you with such a loan.
In my opinion it is better to simply look for a certified private student loan, as the lenders of these types of loans are more prevalent, and you will have to do less searching in order to find a reputable lender.
The way things are going now within the student loan, and financial aid community, it wouldn’t surprise me if all private education loans would mandate school certification in the near future. I think that this would be a good thing because it would ensure that student-borrowers would utilize the proceeds of their loan only towards education-related expenses, and it would cut down on predatory lending.
