- Non-federal alternative educational student loans are offered by banks or lending institutions such as credit unions to help bridge the gap between the cost of education and the amount of financial aid received.
- These are private loans that are not guaranteed by the federal government.
- Non-federal alternative loans can vary widely in their terms and conditions (such as interest rates, repayment terms, and fees).
- The following are general characteristics of private educational loans:
- The borrower must be credit-worthy or have a credit-worthy co-signer.
- Students can apply for the loan, however, they will be required to have a co-signer.
- Most private educational loans have a co-signer release option.
- Since a credit check is likely, not everyone is approved for an alternative educational loan.
- Intereste rates can be fixed or variable and based on the credit rating of the borrower/co-signer and the U.S. Treasury rate or the LIBOR rate (London based rate).
- Your interest rate is determined when you apply for the loan and a credit check is complete, however, any credit checks for private educational loans done within a 30 day window will not have an adverse effect on your credit. You are considered to be shopping.
- There are no origination fees.
- You do not begin repayment until six months after the student graduates or withdraws from school.
Borrowers may choose any participating lender when borrowing through the non-federal private educational loan programs. In order to assist students who would like guidance in selecting a lender, we have developed a list of commonly-used lenders. We encourage you to compare these and other lenders and choose those whose repayment, services, and benefits meet your needs.
Once you apply for a non-federal private educational loan, you will be requried to complete the "Self-Certification Form". The following links will give you the information you need when completing that form
Once again, borrowers may choose any lender, even if the lender is not identified on the lender list.
Students should contact lenders directly about non-federal alternative loans. Students are permitted by law to choose any lender they wish for their educational cost needs.
- Does the loan have any front or back-end fees?
- What is the current interest rate and how often does it change?
- If the interest rate is based upon your credit score, what is the highest and lowest current rate?
- Is the interest rate variable or fixed?
- Many lenders offer incentives, so ask how you get them AND how can you lose them (for example, the loan is sold to another lender or you are late on a payment).
- What is the interest rate difference if you have a co-signer?
- How many months will you be in repayment?
- When do you begin repayment?
- Is there any type of death and disability clause?
- Does the lender offer a co-signer release option? If so, how do you request the release and how many payments must occur.
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