Are there Student Loans that Do Not Require School Verification?

Student loans that do not require school verification are known as direct-to-customer private student loans. With direct-to-customer private loans, you don't need to wait until the college you plan on attending approves the borrowing amount. While it does simplify the process, getting a loan that doesn't require school verification can expose you to a number of risks. You may wind up over-borrowing and getting higher interest rates than you would with verified private student loans.

Understanding Direct-to-Customer Private Student Loans

Private student loans are student loans that issued by private banks and finance companies. They are usually used to cover college expenses that federal student loans and other forms of government-based financial aid can't cover. This includes housing expenses, as well as the costs of textbooks and other educational equipment. In many cases, private student loans can't be used to cover the expenses you incur while living off-campus.

School-channel private student loans - private loans that certified by the college you are attending. Once the lender approves the loan, the school has to sign off on the amount you're borrowing in order for the loan to take effect. This is done to ensure that you don't take on policies that would leave you with more financial burden then necessary. Once the amount is certified, the funds are deposited directly to the school.

Direct-to-consumer private student loans - private loans where the school's approval isn't required. The funds are deposited directly to you as soon as the lender approves your loan. This can take as little as a few days. That said, the lenders will contact your school to confirm that you are attending it before approving the loan.

With both types of loans, the amount you can borrow depends on your credit score and how much debt you have relative to your income. Generally speaking, the closer to perfection your credit score is, the more you can borrow. While direct-to-customer private student loans usually have caps, they are usually higher than those of school-channel private student loans. While it does give you more flexibility, it does add to your student loan debts, which may not be a good idea on the long run.


Since most students can't meet their requirements (simply because they are too young to have much of an opportunity to establish good credit), lenders will encourage you to get a co-signer. A co-signer should be a parent, a relative, or a guardian with a good credit score.

Origination Fee

Both types of private student loans may require you to pay an origination fee - the one-time cost of starting your loan. Depending on the lender, it can be either subtracted from the loan or added atop of it. Some lenders leave the choice up to you.

Interest Rates

While federal student loans have fixed interest rates, private student loans have variable interest rates. In other words, the value of your interest payments will increase or decrease at different rates. The rate is changed every month depending on your credit rating and the national financial indicators such as the Wall Street Journal Prime Rate. Direct-to-customer private student loans usually have higher interest rates than school-channel student loans. Furthermore, while interest payments for school-channel private student loans are tax-deductible, the same isn't true for direct-to-customer private student loans.


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