Alternative Loans
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What is an alternative loan? An alternative loan is a loan the student can take out from a private lender to pay for post-secondary education.
Unless the student has a well-established credit history, the student should always apply with a cosigner. Interest rates depend upon the combination of the
student's credit history and the cosigner’s credit history. Payments begin within six months of graduation, dropping below six credits or withdrawing from
school. The student can borrow the full amount of the cost of attendance, less any other financial aid awarded. Each lender has specific loan terms.
How do I choose an alternative loan lender? Alternative student loans are not guaranteed by the government and their interest rates are
not capped. Before considering one, make sure all government and institutional finances are exhausted. If there are no other ways to fill the gap, shop around and
research various lenders before choosing an alternative loan. Keep written records of all forms, applications, correspondence, especially regarding discounts
and special deals, for the entire life of the loan. Make note of anyone spoken to about the loan. If the student chooses to use one of the lenders on our list,
contact each lender for the most up-to-date loan terms and information.Alternative Loan Lender List (PDF)
How do I apply for an alternative loan? On the lender list linked above are lenders who work electronically with the Office of Student
Financial Planning. The student is not required to use one of these lenders. If the student wishes to use a different lender, please contact the Financial Aid
Office. Should the student wish to use one of these lenders, he or she may
apply online. Initially, the student will be required to go through some online loan counseling. The student will then be directed to FastChoice where the
student can compare lenders. After applying, the student must provide the lender with all the information the lender needs and also sign a master promissory
note. After the lender receives everything they need, the lender will send the school a certification request. Upon certification the loan will guarantee and a
disclosure statement will be sent directly to the student. REVIEW THE DISCLOSURE STATEMENT CAREFULLY and call if you haquestions. For an all-year
student, the loan will disburse in two parts: once in fall and once in spring.
Question to ask yourself:
Students should only turn to alternative loans after exhausting all other financial aid possibilities. Contact the Carthage Financial Aid Office regarding
financial aid and the Carthage Business Office regarding payment plans.
Before turning to alternative loans, students should consider the following:
- Have I exhausted all possibilities for federal or institutional aid?
- Have I received the maximum Stafford loans I’m eligible for?
- Have my parents considered applying for a PLUS loan?
- If my parents don’t believe they would be approved for a PLUS Loan, do they realize a PLUS denial could get me between $4,000 and $5,000 of
unsubsidized Stafford loans? This would reduce the amount I would have to borrow in an alternative loan.
- Have I reviewed the private scholarship book in the Financial Aid Office periodically to see whether I could be eligible for any scholarships?
- Have I talked to my various professors about Carthage scholarships?
- Have I reviewed this Web site carefully to see what other possibilities for aid there might be?
- Have I or my parents had any special circumstances occur this year such as loss of job, divorce, remarriage, one time income, medical emergency?
Questions to ask lenders:
- What up front fees will I be paying for this loan? What interest rate will I be paying on this loan?
- What will my payments be on this loan?
- What will the total amount of this loan be including interest and provided I do not prepay?
- What is your lowest interest rate and fee combination and how can I get it? Is the rate only for a limited period, or is it for the life of the loan?
- Do I have a low credit score? If I do, how can I improve my credit?
- Is there a limit on how high the variable rate can go? How often is the interest rate adjusted?
- When do I have to start making payments? Would you allow me to defer or reduce my payments temporarily because of economic hardship? If so, under
what circumstances and for how long?
- How long will I be repaying the loan? How can I get the best benefits to reduce my payments at time of repayment?
- What is your contact information in case I have to call you back?
- Will the loan be paid directly to the school or paid directly to me? (see below)
A word of caution: Lenders may have several different kinds of loans that you can choose from. If the loan proceeds are being paid directly
to the student rather than the school then this is a “Direct to Consumer Loan.” Most of the time these are NOT the best loans for you. They often charge
higher interest rates and/or higher up front fees. They are inviting because they are often easier to apply for and disbursement is sooner. They often do not have
the normal protections and payment provisions of a regular school loan certified by the school and disbursed to the school. BE VERY CAREFUL if you are
choosing this type of loan. They were created for non-degree seeking students who cannot get regular school loans.
How do I consolidate an alternative loan? Alternative student loans cannot, in general, be consolidated with federal student loans.
The low interest rates on federal consolidation loans are not available to alternative student loans. Nevertheless, there are several options for refinancing
alternative student loans. More information...
Additional Resources:
Advice and questions to ask regarding alternative loan borrowing
Commonly asked questions about alternative loans
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