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Private Alternative Loans

What is a Private Alternative Loan?

A private alternative loan is a non-federal educational loan, through a private lending institution, typically issued in the student's name and requiring a co-signer. It is in your best interest to borrow the maximum amount of federal loans for which you are eligible before borrowing any private alternative loans. Private loans typically have higher interest rates, more fees and less flexible repayment options than federal loans.

Private Alternative Loan Considerations

  • Apply for federal loans first - submit the FAFSA each year.
  • Apply with a credit worthy co-signer to receive a more competitive rate.
  • Do your homework. Ask questions of your lender.
  • Budget wisely and borrow only what you need.
  • Know your interest rate before you sign your promissory note.
  • Keep track of your loan debt. Monitor your loan debt and calculate your estimated monthly loan payment.
  • Understand the responsibilities of the cosigner. A cosigner is equally responsible for repayment of the loan and his/her credit is affected.

You have the right to select the alternative lender of your choice. When looking for lenders, some of the benefits you might want to look for are:

  1. Are they available to undergraduate students?
  2. Do they have competitive interest rates? - The rates are based on both you and the cosigner.
  3. What kind of origination fees do they have?
  4. Is there a cosigner release option?
  5. Is there a deferment option while you are in school?
  6. Is there a satisfactory academic progress requirement?
  7. Do they have an eSignature option?
  8. Will the interest be capitalized once you start repayment?

Valid Loan Term Dates:

Fall/Spring 2012-2013
August 2012-May 2013
Fall 2012 only
August 2012 December 2012
Spring 2013 only
January 2013-May 2013

If you are denied:

Keep in mind that multiple loan applications can negatively affect your credit report. Before you apply through a second or a third lender, we suggest that you determine why you were denied by that first lender.

  1. Did your credit history negatively affect the application?
  2. Did your cosigner's credit history negatively affect the application?
  3. Is there something on your credit report (or your cosigner's) that can easily be corrected?
  4. Is there a possibility you will be approved with a different cosigner?

Get a copy of your FREE credit report at https://www.annualcreditreport.com/cra/index.jsp.