Loans for Undergraduates & Parents

This topic page aims to provide Undergraduates & Parents with tangible action steps and helpful reflection prompts to better navigate the educational loan landscape. The information on this page breaks down the borrowing process as follows:

• Understanding your initial aid offer
• Determining your borrowing needs
• Reviewing available loan and lender programs
• Introducing the application process
• Highlighting additional considerations before borrowing 

Understanding Your Aid Offer 

WHAT IS YOUR INITIAL FUNDING?

Upon acceptance to Duke, students will receive an overview of the initial financial aid available to them. Whether in the form of your estimated Expected Family Contribution or an official financial aid offer, this will include any scholarships, grants, or work-study you have qualified for, as well as the amount in Federal Student Loans you are eligible to borrow. 

Need a refresher on the types of aid available at Duke? Review the Types of Aid page on the Karsh Financial Aid website! 

With outside scholarship and grant opportunities being limited, it is common for students and their families to rely on loans to meet any remaining funding needs.

Sample Aid Offer

1st Year Undergraduate Student; Cost of Attendance at $98,500

*The example above is to demonstrate how a financial aid offer could appear within the context of a student needing additional funding to meet the total Cost of Attendance at Duke University. These funds are not guaranteed and are at the discretion of students and their families to secure. 

Determining Your Borrowing Needs

what are your remaining costs outside financial aid?

Students are permitted to receive financial aid up to the Cost of Attendance (COA). 

There may be some opportunities to save on certain expenses included in the COA, particularly when it comes to estimated costs for Non-Billable items such as course materials and miscellaneous personal expenses.  

Click here to review the complete definition as well as other examples of the total Cost of Attendance on Duke's Financial Aid Website.

As a result, students and their families may see a slight reduction in their total financing needs to address only their Billable expenses at Duke; the costs that will ultimately be reflected in their bill from the Bursar. 

Moreover, contributions from education-specific accounts like 529 plans, funds from personal savings, or breaking up the semester bill into monthly installments via Duke's Monthly Payment Plan can further impact how much in outside financing students and their families will need to rely on. 

Identifying Your Loan Options

WHAT ARE MY CHOICES FOR LENDERS & LOAN PROGRAMS?

Federal Student Loans

Before highlighting other types of lenders, it is important to note that most students will exhaust their eligibility for Federal Student Loans before utilizing other types of loans. Federal Loans do not require credit checks or co-signers, may provide interest subsidies while in-school, and have more flexibilities and safety nets available to borrowers during repayment. 

The type and amount of federal student loans you are eligible to borrow is determined by the information provided in your FAFSA, your dependency status, and your year in school: 

Federal Parent PLUS Loans 

The Federal Loan program also offers borrowing options for parents. The Parent PLUS Loan is a type of federal loan and is designed to provide a competitive borrowing option for individuals with more sensitive credit history. Parent PLUS Loans do not utilize traditional credit metrics for the basis of approval, like debt-to-income ratios or credit scores, but rather determine approval by "adverse credit history". Visit Federal Student Aid for a complete definition as to what constitutes an adverse credit history. 

Due to legislative matters and changes to the federal loan programs, parent applicants that are approved for the PLUS Loan should confirm their status as a Legacy or New borrower when reviewing the amounts they are eligible for:

Outside the Federal Loan program, private lenders offer borrowing options, many for both students and parents alike. These types of lenders and loan programs fall into two overarching categories: State-Backed Lenders and Financial Institution Lenders. 

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State-Backed Loans 

State-Backed Loan programs are offered by non-profit organizations that work closely with their respective government counterparts to provide educational resources and support to students and their families. In addition to traditional loan products for students and parents, some state-backed programs may also provide scholarship opportunities, forgivable loan programs, and educational webinars. 

Common terms, conditions, and other features of State-Backed Loans include: 

• Credit Requirements- An established credit history, with borrowers needing to demonstrate a certain level of creditworthiness, typically by meeting a minimum credit score requirement and/or obtaining a co-signer that meets the credit requirements.
• Interest Rates- State loans generally have a smaller range of possible interest rates, which can help in the early stages of research when trying to determine the overall cost of the loan.
• Borrowing Limits- Smaller or regional lenders, including some state-based programs, may have more restrictive annual and/or aggregate borrowing limits. Check to see if the loan program has a set cap or will lend up to the Cost of Attendance.
• Repayment Terms- These programs tend to be limited in repayment options, with many lenders only providing a singular, standard repayment term of 10 years.

Financial Institution Loans

Financial Institution Loans are programs offered through banks, credit unions, or commercial lending organizations. These loans can be taken out directly by the student or in the name of their parent. 

Common terms, conditions, and other features of these loans include:

• Credit Requirements- While a select few may take into account things like GPA and job prospects after graduation, private loan options are typically based solely on credit. It is common for students to acquire co-signers to help improve their odds of approval as well as increase the likelihood of receiving a lower rate.
• Interest Rates-For borrowers and their co-signers with very good to excellent credit, these loans may result in some of the most competitive interest rate offers available. However with such a wide range of possible rates, it may be difficult to know exactly where a borrower will get approved at until they go through the formal application process.
• Discounts & Other Benefits- Reductions in interest rates may be available for things like repeat borrowing, achieving a certain GPA, and graduating from your program on-time. Private lenders may offer multi-year approval and other ways to streamline the application process from year to year. Similarly, private lenders might also offer other consumer products, and some appreciate being able to build relationships with financial institutions for future financial needs (banking, saving, other borrowing etc.).
• Repayment Terms- Private lenders typically have more options for repayment, commonly available in 5, 10, 15, or 20 year terms.
• In-School Payment Agreements- Borrowers opt-in to modified payment agreements while in school, like interest-only payments or a low, fixed payment (ie. $25/month). Although these payment agreements may provide some savings on a borrower's interest rate, it is important to read the terms of an in-school payment agreement as missed payments could have serious consequences, such as negative credit reporting and even the cancellation of future disbursements.  

Tools for Researching Lenders

what resources can i use to find the loan that is right for me?

Before you review the highlighted resources, remember that as a borrower, you are able to “shop for rates”- apply to more than one lender in a given timeframe to receive multiple offers. Typically, borrowers may apply with 2-3 lenders over a single 2-week time span. Each application will only count as one “hard inquiry” towards an individual’s credit. Multiple hard inquiries can have a negative impact on someone’s credit. 

Alternatively, some lenders may be able to provide an overview of the terms of your loan, including approval and range of possible interest rates, by performing a “soft inquiry”- a credit assessment used to pre-approve or pre-qualify a prospective borrower without a formal application and with no impact on an individual’s credit. 

By shopping for rates and comparing terms offered by lenders, you can make a more informed borrowing decision. The list below highlights common loan terms and borrower benefits worth considering as you narrow down what features are most important to you as a borrower. This list can also be used in conjunction with the Loan Comparison Tool in the “Additional Resources” section of this page: 

• Student vs Parent Borrower- Will the loan be in the name of a student, likely with the parent needing to serve as a co-signer, or will the loan be taken out by the parent directly? Is there a difference in the terms of the loan depending on whom the borrower is?
• Borrowing Amount- How much can I borrow?
• Interest Rates & Fees- What is the cost to borrow?
• Credit Check Impact- Does the lender offer a “soft inquiry” or only a “hard check” for credit purposes?
• Duration of Credit/Approval Decision- If approved, how long is the credit decision good for before it expires and I have to re-do the process?
• Co-Signer Release- For loans with a co-signer, are there options or criteria for eventually releasing the co-signer from the loan?
• Borrower Discounts- Are there instances where I could save money on borrowing costs, such as reductions on the interest rate or statement credits toward my loan balance?
• Repayment Options- What choice do I have in paying back the loan?
• Repayment Affordability- Are my estimated payments affordable?
• Flexibilities During Financial Hardship/Unique Circumstances- Am I able to pause repayment if I lose my job? What happens to my loan if I take a Leave of Absence during school? 

APPLYING FOR YOUR LOAN

what DOES the OVERALL PROCESS LOOK LIKE?

Once you’ve determined what kind of loan type- Student or Parent- you will use, which loan programs you will work with, and how much you plan to borrow:

• Submit applications for each loan program
• Complete all required documents, such as disclosures and promissory note
• Monitor your Duke student account for loan certification, disbursement, and refunds if applicable

Review the flowchart below for a complete overview of the student loan process!

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Recommended Action Steps 

what should I do to prepare before i borrow student loans?

• Review your initial financial aid offer 
  Confirm your Cost of Attendance and verify Federal Loan eligibility
• Determine your costs and borrowing needs
  Identify your Billable expenses and consider how personal funds or the monthly payment plan can reduce what you need in financing
• Research available loan & lender options
  Use the Recommended Lender List and other highlighted resources to compare borrowing options
• Prepare to apply
  Review your credit report, know your credit score, and start having conversations with your family or support systems to reflect on final borrowing options
• Submit your application(s), accept your best loan offer, and complete all required documents
  Monitor your Duke student account for loan certification, disbursement, and any refunds when applicable

Additional Loan Resources