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What is multiyear approval for student loans?

College student looks at books in the library
Peter Cade/Getty Images
College student looks at books in the library
Peter Cade/Getty Images
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Multiyear approval is a student loan option that allows you to see how much money you can borrow for your entire degree with a single loan application. This, in turn, can make it easier for you and your family to plan your finances and give you peace of mind knowing that your college expenses will be covered. However, there are some considerations to keep in mind before you apply.

What is multiyear approval for student loans?

Instead of having borrowers apply for a loan each academic year before classes start, some private lenders offer borrowers a multiyear approval option for their student loans. This feature allows students with a creditworthy co-signer to secure funding for multiple years of study with a single application and just one hard credit inquiry.

Mindy Hager, senior vice president of Student Lending at Citizens Bank, says that when students and their families fill out their application, the lender will look at them holistically, instead of focusing just on what they can afford today.

“If a family comes during the student’s freshman year and are looking to borrow $15,000, for example, we’ll check if they can support that amount through basically a four- or five-year period,” Hager says. “Then we will approve them for that full amount of $15,000 times four or five, so we’re going to tell them, ‘You have $60,000 or $75,000 that is available for the entire education of that borrower.’”

Of course, the lender won’t give you the full amount in a lump sum, just the amount you requested for that academic year, which in this example would be $15,000. But you have the certainty of knowing that you can come in the next few years and apply for any amount up to that $60,000 or $75,000 cap, and you’ll get approved — as long as your credit score and financial situation stay more or less the same.

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 (fixed or variable) and a repayment term for each loan you request under the multiyear option. Additionally, interest rates from private lenders fluctuate according to market conditions, meaning that even if your credit score and income remain the same (or even better), there’s always a chance that you won’t be able to get the exact same rate you originally secured.

Lenders that offer multiyear approval

Not every lender offers multiyear approval, and those that do each have their own version of this feature.

Citizens Bank

With Citizens’ Multi-Year Approval, borrowers can fill out 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 that you can switch colleges and still be approved for the multiyear option. However, to remain qualified, you’ll have to apply using the same co-signer each time and pass a soft credit check.

College Ave

College Ave Multi-Year Peace of Mind will let you know 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, as well as the repayment term.

However, to remain preapproved for future loans, your school will need to verify that you meet its satisfactory academic progress guidelines. You’ll also need to pass a soft credit check.

Discover

Discover tells borrowers whether they’re approved for its Multi-Year Option during the loan application process, which can be done online or over the phone. In future years, much of the loan paperwork will already be prefilled.

Discover requires that you use the same co-signer and pass a soft credit check in order to remain prequalified, and you must be in the same school and program you listed on your first application.

Sallie Mae

Sallie Mae lets you know whether you’re approved for its Multi-Year Advantage once you fill out an application online or over the phone. Sallie Mae allows you to keep its multiyear option even if you switch programs or schools. However, you’ll be subject to a soft credit check each time you request a loan.

What are the benefits of using one lender for all student loans?

Having all your loans under the same umbrella comes with some perks, including:

  • Faster approval. Your lender will already have all of your information on file, and each application will be prefilled for you. 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 make your credit score drop by as much as 10 points and can stay on your report for up to two years. David Green, CEO of Earnest, says that by selecting the multiyear approval, you avoid further dents in your credit score, as the lender will only do a soft credit check for all future loans.
  • More savings. Most lenders offer a standard interest rate discount of 0.25 percent for signing up for automatic payments. But if you’re a returning borrower, you may be eligible for additional loyalty discounts and rewards. For example, Citizens Bank offers a loyalty discount of 0.25 percent on each subsequent loan you take out with the company.
  • 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 come in handy should you decide to refinance in the future, as you won’t have to get statements from multiple lenders.

How to apply for multiyear approval

Applying for multiyear approval is pretty straightforward. You just need to select a lender that offers this option and have the following at hand to fill out the 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).

If you’re applying with a co-signer, you’ll also need to include that person’s name, contact information, Social Security number, income and employment details. 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, in addition to your eligibility for multiyear approval. If you’re eligible for multiyear approval, you’ll be able to select the multiyear option before signing on the loan.

How to request funds for each school year

Hager says that once your academic year ends, the lender will contact you to know whether you’d like to request another loan for next year. If you haven’t received the bill from your school by the time you get the call, don’t fret — you can always apply later.

Once you crunch down 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.

As a final step, 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.