If the other types of assistance you receive aren't sufficient to meet your college costs, you may be interested in an alternative (private) loan. Some lending institutions offer these loans to students with no fees, low interest rates and flexible repayment options with no payments due while you’re in college. Others, however, charge origination fees and may require payment of interest while you’re in college. Each lender’s policy is different. Be sure to check out a few options before making your final decision.
Don't apply for an alternative loan until you’ve received your financial aid award letter and know what other types of assistance are available to you. Be sure to consult your college’s financial aid office before selecting an alternative loan. The financial aid office may be able to suggest lenders which offer alternative loan programs that suit your financial needs. If you do apply for an alternative loan, be aware that some lenders may perform credit checks, income-to-debt ratios, or require a co-signer.
The U.S. Department of Education (ED) and the Federal Trade Commission (FTC) offer a free consumer guide for college students (and their families) seeking new loans or consolidating existing loans. The guide, entitled Student Loans (Avoiding Deceptive Offers), may be accessed under the “Consumer Protection and Financial Literacy” section of the Resources page at StudentAid.gov. In addition, the National Council of Higher Education Loan Programs, Inc. (NCHELP) provides two guides, "Private Student Loans, A Guide to Responsible Borrowing" and "Private Student Loans, Understanding the Cost of Borrowing," both containing beneficial information about private loan borrowing.
Additionally, Student Lending Analytics, an independent research and advisory firm, makes available two guides designed to assist students and parents in making informed decisions about alternative/private loans. The 2008 Guide to Alternative Loans provides information about alternative loans in a Q & A format, while Private Student Loan Options is a listing of alternative loan providers. The lenders which appear on this list were those most frequently cited on over 700 2- and 4-year institutions' preferred lender lists. More information is available on the FinAid!® website, which provides information about student loan comparison sites, including minimum standards to be used in determining the usefulness of the sites, and links to available sites.
The accessibility of these lists on this site should not be construed as ISAC's endorsement of any lender that appears on the lists.