Key takeaways
- Multiyear approval for student loans makes it possible for applicants to apply for funding for the duration of their degree program all at once.
- There are some downsides to using a single lender for all student loan needs, including the fact you may miss out on a better deal by not shopping around.
- Not all lenders offer multiyear approval for student loans, so you’ll need to seek out institutions that make this offer.
Multiyear student loan approval gives you the chance to see your borrowing limit for the entirety of your education. You apply once and get approved for loans over the course of your entire degree program.
Knowing how much you can borrow each year can be helpful for planning your finances over the years you’re in school, but before you apply, you need to understand how it works and whether there are drawbacks to consider.
What is multiyear approval for student loans?
Instead of having borrowers apply for student loans before classes start each academic year, some private lenders offer borrowers a multiyear approval option for their student loans. This feature lets students with a creditworthy co-signer secure funding for multiple years of study with a single application and just one hard credit inquiry.
The lender will only release the amount you requested for that academic year and not the whole lump sum for the duration of study. Instead, you have the certainty of knowing that you can return and ask for any amount up to the total amount of student loans you were approved for, without any further impact to your credit.
It’s also worth noting that even though you’ll be preapproved for the funds, your interest rate and terms won’t necessarily be the same for all your loans. You still have to choose a type of interest and a repayment term for each loan you request under the multiyear option.
Keep in mind
Interest rates from private lenders fluctuate according to market conditions, so even if your credit score and income remain the same or improve, there’s always a chance you won’t get the same rate you originally secured.
Using one lender for all student loans: Pros and cons
Getting a multiyear approval for student loans comes with some benefits, but there are downsides that come into play as well. While some disadvantages have to do with using private student loans instead of federal loans, others can apply when you settle on a single lender for all your borrowing needs instead of shopping around.
Consider the potential advantages and disadvantages of multiyear student loan approvals:
Pros
- Faster approval after year one
- Less impact on your credit
- Simplicity and convenience
- Easier repayment
Cons
- Potentially higher rates
- No guarantees
- Private loans aren’t subsidized
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- Faster approval after year one: Your lender will already have your information on file, and each application will be prefilled. You just need to verify that the information is still accurate, sign the papers and you’re done.
- Less impact on your credit: Hard credit inquiries can result in a temporary ding in your credit score, which can hurt. Multiyear student loan approvals will result in one hard inquiry on your credit report in the first year.
- Simplicity and convenience: Applying for student loans once and not having to repeat the entire process gives you one less item to check off your to-do list each year. This can be a major benefit for busy students who also work.
- Easier repayment: Using the same lender allows you to manage and pay all your loans in a single hub, so you don’t have to bounce from one lender’s website to the next. This can also be useful if you decide to refinance, as you won’t have to get statements from multiple lenders.
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- Potentially higher rates: Since you won’t be shopping around for student loan options each year, you could miss out on a good deal from another lender.
- No guarantees: The idea behind multi-year approval is that you can draw funds each year. However, the fine print of these agreements usually gives the lender the option to decline future loans if your credit or finances change.
- Private loans aren’t subsidized: If you can get federal student loans by filling out the FAFSA, you should use those before private loans. This is especially true if you can demonstrate enough financial need to qualify for subsidized student loans.
How to apply for multiyear approval
Applying for multiyear approval is pretty straightforward, and it works similarly to applying for other types of financing. Since the institution of higher education you plan to attend is part of the process, however, you’ll need to have some information about your school on hand in addition to your personal information.
You need to select a lender that offers this option before you apply for multiyear loan approval. If you’re applying with a cosigner, you’ll also need to include that person’s name, contact information, Social Security number, income and employment details as well. Some lenders may also require you to provide one or more personal references as part of the application process.
Using this information, the lender will determine whether you’re approved for the loan and your eligibility for multiyear approval. If you’re eligible for multiyear approval, you can select the multiyear option before signing the loan.
What you need to fill out the lender application
- Your school’s information
- Your anticipated graduation date
- Your requested loan amount
- The academic period you’ll need funding for
- A copy of your passport, your license or another state-issued ID
- Your Social Security number
- Your contact information
- Copies of your two most recent pay stubs, W-2s or tax returns (if applicable)
- Your employer’s contact information (if applicable)
- Duplicate information for your co-signer (if applicable)
Requesting funds for each school year
Once your academic year ends, you’ll need to request some of the funds from your multiyear loan agreement for the next college year. The following steps can help you do just that.
- Figure out how much funding you need for the next year: Determine how much funding you need to pay for the following year, including tuition, room and board and other higher education expenses.
- Request more funding online: Once you crunch the numbers and see how much you’ll need, go to your lender’s page and log into your account. There, you’ll see the option to request another loan under your multiyear approval plan. This new application will already be prefilled for you using last year’s information.
- Get approved: At this point in the process, the lender will do a soft credit check to make sure that your financial circumstances haven’t drastically changed over the last year. If everything checks out, you’ll get approved for the funds and the money will be sent to your school.
Lenders that offer multiyear approval
Not every lender offers multiyear approval, and those that do have their own version of this feature.
Citizens Bank
With Citizens’ Multi-Year Approval, borrowers can complete the student loan application online or on the company’s mobile app. Once you complete the form, the system will automatically tell you if you’re eligible for the multiyear approval. From there, you just need to tick the box accepting this option and sign the papers.
It is also worth highlighting that Citizens Bank allows you to take your loans with you, meaning you can switch colleges and still be approved for the multiyear option. To remain qualified, you’ll have to apply using the same cosigner and pass a soft credit check.
College Ave
College Ave Multi-Year Peace of Mind will inform you if you’re eligible for multiyear approval during the online application process. At that time, you’ll also be able to choose the type of interest you want for that first loan and the repayment term, but to remain preapproved for future loans, your school must verify that you meet its satisfactory academic progress guidelines. You’ll also need to pass a soft credit check.
Sallie Mae
While Sallie Mae does not have an official multiyear approval program, it does have a Multi-Year Advantage – meaning that borrowers who reapply for a Sallie Mae loan with a creditworthy cosigner have a high approval rate year over year. Unlike other multiyear approval programs, you still need to submit an application and go through a hard credit check every year, but the program could give you peace of mind when you apply for future years of funding.
Rhode Island Student Loan Authority (RISLA)
Rhode Island Student Loan Authority (RISLA) offers a multiyear student loan program with no fees and an easy process from start to finish. Applicants can apply for student loans once and qualify for funding that can be used over multiple years of higher education.
Note that some borrowing limits apply with this lender, including total loan limits of $180,000 per borrower and $200,000 per family. Also be aware that cosigners listed on the initial application must also be included for each year of renewal of the loan, and that applicants must have similar or better credit and financials for each subsequent year they request financing.
Bottom line
Multiyear approval can be a great thing for people who want to plan ahead and know what resources are available to help them pay tuition in future years. A downside is that you lose out on the opportunity to shop around for a better deal.
As with any college plan, consider all your options, including scholarships, grants, and federal loans to help pay for school, and choose the one that’s right for you. If multiyear approval is the right move for you, contact a lender to start the application process.
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