Student Loans

 

Alternative Student Loans


Sometimes, the government’s financial aid package does not completely cover the cost of attending school. If a student and his family decides to stick with an expensive school, they need to find a way to pay the difference. Alternative student loans, or Private Education Loans, are usually the answer.
Alternative loans may not offer some of the benefits that federal loans can—for example, their interest rates are usually higher and payment (at least on the interest) may begin as soon as the loan has been dispersed, instead of being deferred until after graduation. Because these loans are not backed by the government, a credit check may also be necessary and could affect the terms.

College Loans

As higher education prices rise, the gap is widening between federal financial aid packages and the cost of tuition. In response, many colleges have started their own loan programs. These loans can be offered to students, parents, or both. The interest rates may also be close to those offered by the federal government or significantly higher. If possible, plan to meet with a financial aid officer on a visit to campus, so you can learn about all of your financing options.

Commercial Loans

Useful Websites

For more information on current loan rates and terms, visit:

Another financing option remains in the form of completely private loans. Unlike federal student loans, these are much closer to typical consumer loan like that for a car or a mortgage. Rates and terms vary widely depending on the private lender and the borrower’s credit history. The best loans would charge no fees and offer an interest rate similar to a PLUS loan. FinAid! has a Private Student Loan Comparison Chart that lists terms for some of the most popular commercial loans.

TERI Loans

TERI (The Education Resources Institute) is a nonprofit organization that offers graduate and undergraduate loans. Loans may be as low as $1,000 or as high as the cost of attendance (after financial aid). Undergraduate students may need a cosigner. Many lenders are available through the program, which would affect interest rates.

Signature Loans

Signature loans are offered by Sallie Mae, the nation’s leading provider of education funding. Cosigners are required, at least for the first year. These private loans can be bundled with federal Stafford loans for easier billing and repayment. Interest rates are influenced by the Prime rate as well as the student’s credit rating and chosen school. Students may also receive a 25% lower interest rate if they elect to have payments automatically deducted from their bank accounts.

EXCEL Loans

EXCEL loans, offered by Nellie Mae, these loans go as low as $500or as high as the cost of attendance (minus financial aid). The repayment period is also very flexible, ranging from four years to 20. Borrowers can choose between a rate that varies monthly or annually, set up to two points above prime.

Many of the loans mentioned in the past two sections are direct student loans, while some are in the parents’ names. What is the difference? The next section describes some of the terms and benefits of direct student loans.

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