ALTERNATIVE LOANS 

Alternative loans are available from lenders after a student receives a financial aid package including grants, scholarships, and federally guaranteed student loans, but still needs additional funding to meet additional expenses.  The lender may calculate the amount of the loan based on the cost of attendance minus the other financial aid or an annual loan maximum may be offered.

Alternative loans tend to be more expensive than federal loans since they are insured privately.  The extra cost is passed on to the borrower in the form of higher fees and interest rates.  The lender frequently reviews the applicant's credit history and other factors and may require a creditworthy cosigner.

Who needs an alternative loan?

Students should consider borrowing an alternative loan only after all other resources (e.g. grants, scholarships, federal loans, or part-time jobs are considered.

As an example, a freshman dependent student can borrow up to $3500 under the Federal Family Education Loan Program.  A student who is not eligible for grants or other aid and cannot make up the difference through employment, may need to consider an alternative loan to pay for all educational expenses including registration fees, books, and housing.

What should you find out before you decide on an alterntive loan? 

• What are eligibility requirements?

• What is the interest rate and what is it based on?
  When does repayment begin?  Can payment of principal and/or interest be deferred?

• When is the interest capitalized?

• How much are fees?

• What are the minimum and maximum loan amounts per year?

• Can payment be combined with Stafford loan payments?

• Can I borrow money to cover past due balances from a previous school term?

• Are there interest rate deductions or other incentives for borrowers who make their payments on time?