Current Students

Alternative Loans

What are alternative loans?

Alternative loans are private loans through a lending institution that are not part of the federal government programs. Alternative loans are more expensive than federal government loans and should only be used when all other options have been exhausted. Research all possibilities for scholarships, grants, work program, and federal loan programs before borrowing from an alternative loan program. If you determine you need an alternative loan, research the lenders for additional information. Choose the loan that best suits your needs and remember to borrow only what you need!

What should I look for in an alternative loan?

Annual Percentage Rate (APR) – The APR is the annual cost of your loan including the effect of any fees and charges in addition to interest. The APR is determined based on the terms of the loan. APRs will differ based on the terms and loan amount. Make sure you are comparing like loan amounts when comparing APRs to receive a true comparison. Note, if the rate is variable, the APR may be increased after you take out the loan. Take APRs and the other terms mentioned above into consideration when borrowing an alternative loan.

Repayment Incentives

Does the alternative loan reward borrowers who make payments on time? For example, after 48 consecutive on-time monthly payments will you receive an interest rate reduction?

Loan Limits

Does the loan have an annual or aggregate limit? Can you afford to borrow within these limits? It’s a good idea to borrow from the same lender each year, so make sure the loan can cover your costs throughout your entire education.


Do you need to know quickly if you qualify? Does the lender offer loan pre-approval over the phone or internet?

Cosigner Requirement

Does the alternative loan require you to have a cosigner? Sometimes cosigners reduce the costs of the loan, but if you can’t find a cosigner, you’ll need to find an alternative loan you may borrow on your own.

Interest Capitalization

If you choose not to pay the interest on your loan while you are in school, the interest may be capitalized (added to your principal balance). When is the interest capitalized? Annually? At repayment? If the interest is capitalized annually the loan is more expensive than if it is capitalized only once at repayment.


Does repayment begin immediately or after you graduate or leave school? Make payments whenever you can afford to, but if you can’t make regular payments while you’re in school, you’ll need to find a loan that doesn’t require immediate repayment.

Loan Consolidation

Combining student loans into one new loan through one lender can simplify your repayment period. Allowing you to make one monthly payment for all of your student loans. Consolidation extends the length of the repayment period, which reduces monthly loan payments. The total amount repaid over the loan term, however will be greater as a result of the extended repayment term.

Repayment Period

How long is the repayment period in which you repay the loan? If your educational costs require you to borrow large amounts, you may need a longer time to repay the loans.