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Private Educational Alternative Loans
Private Educational Alternative Loans
While Bloomsburg University does not encourage excessive borrowing, we realize that not all students can meet their educational expenses with traditional sources of financial aid. Private Educational Alternative Loans are available through many lenders. We encourage student borrowers to carefully investigate these loan programs. Students are encouraged to contact the Office of Financial Aid prior to pursuing Private Educational Alternative Loans. Students should first exhaust all other sources of funding including Federal Direct Student Loan, additional Federal Direct Student Unsubsidized Loan based upon Parent PLUS Denial, Federal Direct PLUS Loan (undergraduate only), and Federal Direct Graduate PLUS Loan(graduate only) before borrowing a Private Educational Alternative Loan.
- Undergraduates & Graduates: Compare the benefits of borrowing a Federal Direct Student Loan before a Private Educational Alternative Loan.
- Undergraduates: Compare the benefits of borrowing a Federal Direct PLUS Loan before a Private Educational Alternative Loan.
- Graduates: Compare the benefits of borrowing a Federal Direct GradPLUS Loan before a Private Educational Alternative Loan.
If the student borrower has an insufficient credit history and/or proof of income, a co-signer will be required. (Although a graduate student may have sufficient credit to obtain a Private Educational Alternative Loan on their own, ask the lender if the fee(s)/interest rate would be reduced on a graduate level loan if there were a co-signer.)
Lenders may charge a fee on a Private Educational Alternative Loan. Many times the fee is based on the credit history of the co-signer.
Private Educational Alternative Loans do not have a cap on the interest you will be charged. Interest rates may be adjusted monthly or quarterly, depending on the loan product you choose.
Do not borrow excessively. The Private Educational Alternative Loan you are applying for, as well as your Federal Stafford Loan, will go into repayment typically six months after you graduate or drop to less-than half-time enrollment (less than six credits). Grace periods on Private Educational Alternative Loans vary by lender. Remember you will also have other expenses (rent, car payments, insurance, and utilities) after graduation. Do not overwhelm yourself with debt burden.
We recommend that if you have utilized a Private Educational Alternative Loan in the past, you remain with that lender. This will help limit the number of repayment obligations you will incur.
We suggest that you contact individual lenders to obtain as much information on the loan product prior to making a decision on which loan you will apply for. If you have "special circumstances" (not making satisfactory progress, less-than-half time enrollment, non-degree student, or past due balance) pick a loan product that will lend for your specific circumstance(s).
Information you may want to obtain and compare when deciding which loan is best for you is:
- How will the interest rate be determined and how frequently is the interest rate adjusted?
- How often will interest be capitalized (added to the principle of the loan)? The more frequently interest is capitalized, the more it will cost you.
- Will you be charged a fee? How is the fee determined? Would the fee be reduced with a co-signer? Are there any additional fees at the time of repayment?
- Is there a penalty for early repayment?
- Does this loan have a grace period after enrollment ceases? When will repayment start? How long do you have to repay the loan? Does the lender offer any repayment incentives or repayment options?
- How many payments must be made prior to a co-signer being released from obligation?
- Are deferments of principle/interest available for continuing education or any other reason?
- Is there a maximum/minimum amount allowed in an academic year? (Most lenders will limit the amount of a Private Educational Alternative Loan to the cost of education minus any other aid. This may, in some cases, require the Office of Financial Aid to reduce the amount that you have requested even though you have been credit approved for a higher loan amount.)
- Will your loan be serviced by the original lender for the life of the loan?
After reviewing the information on the various Private Educational Alternative Loans, complete only one application. Applying for several loans will slow down the process and could adversely affect your credit rating. Return the loan application directly to the lender, not to the Office of Financial Aid.