After successfully securing a student loan, one crucial step must be completed before your funds can be disbursed: the student loan certification process. This necessary process is designed to safeguard and protect you as a borrower, ensuring transparency and compliance with regulations.
We’re here to help you understand student loan certification, including its duration and the distinct procedures involved for both federal and private student loans.
What Is Student Loan Certification?
Obtaining student loan certification is a mandatory step for borrowers and must be completed before your school receives your student loan funds. During student loan certification, your school may be asked to verify the following enrollment details:
- Your Expected Graduation Date
- Your Year in the Program
- Your Loan Amount
- Satisfactory Academic Progress (SAP)
If you’re borrowing private student loans, you’ll need to complete a Private Education Loan Applicant Self-Certification form. This form includes borrower-protection language, outlines the option to submit a FAFSA (Free Application for Federal Student Aid), and clarifies how obtaining a private loan may impact your other financial aid awards. The self-certification step serves as a means for your lender to gather pertinent information about your enrollment status and the financial assistance you’ve received. By completing this step, you ensure your lender is equipped with accurate details to proceed with the loan disbursement process.
Why Do Lenders Need Student Loan Certification?
Student loan lenders are legally obligated to secure student loan certification before disbursing funds. This is required by law, as stipulated in the Higher Education Act of 1965 and the Truth in Lending Act. Student loan certification ensures both the lender and your educational institution have diligently fulfilled their responsibilities.
Certification forms serve as a mechanism to inform you about the various federal financial aid options available (FAFSA), validate your eligibility based on academic enrollment requirements, and provide transparent disclosure regarding the disparity between your school’s cost of attendance (COA) and the financial assistance you have received for the specific period. By adhering to these certification requirements, lenders aim to safeguard your interests, promote transparency, and maintain compliance with legal obligations.
How Does Student Loan Certification Work?
Once your loan application is approved and you accept the loan terms, the student loan certification process is set in motion. Remember that the student loan certification process varies depending on whether you’re taking out federal or private student loans.
It’s crucial to stay informed and follow any communication from your lender or school to ensure a smooth process and address any additional requirements, if necessary. Here’s a general look at the student loan certification process.
1. Lender Submits Loan Details to the School
Your lender will forward the loan information you provided during the student loan application process to your school for certification. This includes your personal information, enrollment details, and the requested loan amount.
2. School Reviews and Certifies Loan Details
During this stage, your school carefully reviews the loan details to ensure accuracy. This includes verifying your enrollment information, estimating the COA for the designated period, and determining the amount of aid you will receive. For private student loans, the loan amount cannot exceed the COA minus any existing financial aid. If your loan details are accurate and fall within the remaining COA gap, the school can certify the loan without any changes. Alternatively, the school may make changes to the loan, such as reducing the amount or correcting enrollment information, if necessary. In some cases, the loan certification may be denied if the school is unable to verify your enrollment status or if you already have sufficient financial aid to cover your COA.
3. Final Loan Disclosure from Your Lender Provided
Once your student loan certification is complete, your lender will notify you and, if applicable, your student loan cosigner. At this stage, you will receive the final loan disclosure, which provides comprehensive details about the loan. If the school adjusted your loan amount, the updated disclosure agreement will reflect the new amount.
4. “Right-to-Cancel” Waiting Period
After you sign the final loan disclosure, federal regulations require a mandatory waiting period of three business days before the lender can disburse the funds. This waiting period offers an additional layer of protection, allowing you to cancel the loan without penalty if you change your mind.
5. Disbursement of Loan Funds by the Lender
Once the waiting period concludes, the lender can send the certified student loan disbursements directly to your school on the requested date. The duration of the school certification process may vary, typically taking up to five weeks, but occasionally longer. It is common for loan certifications to occur in the weeks leading up to the start of classes to ensure the most up-to-date enrollment information is considered, as changes in enrollment status can occur closer to the start of the academic term, such as students dropping out or adjusting their course load.
FAQs About Student Loan Certification
Does the Same Certification Apply to Both Federal and Private Student Loan Lenders?
No, the certification process differs for federal and private student loans. With federal aid, your school assumes the responsibility of assessing your eligibility for different types of student aid, including federal student loans. If your school determines that you qualify for federal loans, it will record the certification of your eligibility in the Common Origination and Disbursement system. The Common Origination and Disbursement system is a system that effectively tracks your loan data throughout your academic journey.
Private student loan lenders follow a different certification process. They may require you to complete a Self-Certification form, which includes a section for your institution to complete. In some cases, your private student loan lender may communicate with your school directly to obtain the certification sign-off. Understanding how student loans work gives you a helpful refresher on navigating the intricacies of the certification process.
Is There Anything Borrowers Can Do to Speed Up the Student Loan Certification Process?
While the student loan certification process may take some time, certain steps can help speed up the process. Although it’s challenging, being proactive can help streamline the journey. Student borrowers should closely monitor emails and account notifications from their lenders, as these will provide valuable updates on the status of the certification and any subsequent actions required. By staying informed and promptly responding to requests or inquiries, borrowers can contribute to a smoother and more efficient student loan certification process.
What Happens if a School Doesn’t Certify That You Are a Student?
If your school fails to certify your enrollment status, it has implications for the disbursement of loan funds. Legally, your lender is unable to disburse the loan funds to your school without the proper certification. This can lead to payment delays as you navigate the situation with your school’s financial aid office. In more severe cases, disbursement may be halted entirely if your school cannot certify your enrollment. Thus, addressing this issue promptly is crucial to ensure a smooth loan disbursement process.
What If Your School Makes an Error?
If you believe there’s been an error in your student loan certification process caused by the school, contact your financial aid department immediately. Ask them about the specific documentation or requirements needed to certify your enrollment and loan. Also, inquire about the impact on your enrolled courses while you work towards resolving the situation. Doing so could help prevent any potential course disruptions.
What If You Make an Error?
If obstacles in the process are due to an oversight on your part, take action quickly to rectify the situation. This could arise, for instance, if you forgot to enroll in classes or overlooked a required step. If this is the case, you’ll want to contact your school’s admissions and records department or the department responsible for your degree program.
Ask what actions you can take to resolve the issue. Clearly communicate that you are awaiting private student loan certification required for loan disbursement. Taking proactive steps and keeping the relevant departments informed will help expedite the resolution process.
The Bottom Line
Navigating the student loan certification process can seem like a challenging step in financing your education. But it’s a key safeguard for student borrowers, ensuring you remain informed about your rights and protected throughout the loan process. Remember, the certification process differs for private and federal student loans.
If your certification isn’t granted, there’s no need to panic. Contact your school to determine whether the error lies with you or the institution and take prompt action to address it.
If you need additional funds to cover your educational expenses after exhausting other federal financial aid options, ELFI offers private student loans. Our private student loans allow eligible borrowers to borrow up to their school’s cost of attendance, and we don’t charge any fees. Check your interest rate and explore the possibilities of an ELFI private student loan today!
