What is an Alternative Loan?
Alternative loans are available to students who need additional expense funding from outside lenders. The lenders calculate the amount of eligibility based on the cost of attendance minus other financial aid or an annual loan maximum. Alternative loans are insured privately and tend to be more expensive than federal loans due to higher fees and interest rates. A credit history and other factors may be required, as well as a cosigner.
What should I ask BEFORE taking out an alternative loan?
- Have I tried ALL other resources? (grants, scholarships, federal loans or part-time jobs)
- 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 Direct 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?