Alternative (or "private") student loans are educational loans that are not secured or guaranteed by the Federal government. There are many options for this type of funding. Lenders generally provide funding based on credit approval and other factors. The student is the primary borrower. For most loans, the student must be a U.S. citizen or eligible non-citizen. Repayment may begin while the student is enrolled, or possibly be deferred until she ceases enrollment. There is generally no penalty for pre-payment.
Interest rates of alternative loans are generally higher than the Federal loan programs. We strongly recommend borrowing through the Federal Stafford loan program first, and at least considering the Federal PLUS loan option before using alternative loans.
How much can I borrow?
The maximum amount of the alternative loan you may borrow may be calculated as follows:
Your yearly cost of attendance - all financial aid you are receiving = Your maximum alternative loan
This budgetary limit may allow for a loan that is larger than your actual balance owed, which you can view on PRISM.
We very strongly recommend that you borrow only as much alternative loan as you need to cover immediate expenses. Remember, you will be repaying these amounts with interest!
Do I need a co-borrower?
If you are a first-year student and/or first-time loan applicant, you will usually need a credit-approved co-borrower to secure an alternative loan. The decision to require a co-borrower is up to your lender. However, even if your lender does not require one, in most instances, adding a co-borrower will secure a better interest rate and/or fees for your loan.
Who can co-sign?
Any adult with acceptable credit can co-sign for your loan. It does not have to be a parent. Though parents are often a good choice, a grandparent, other relative, or friend may apply. In most instances, the co-borrower must be a U.S. citizen or eligible non-citizen with acceptable credit. Some loans have income requirements as well.
Most lenders off a "co-borrower release" options, where the co-borrowers's responsibility for repayment can be removed after the student borrower meets certain criteria. In most instances, the student borrower must meet credit approval on her own at the time of the release request.
How do I apply?
Most lenders encourage students to apply online. When you do, the lender will conduct a credit screening to determine if you are approved for the loan. Complete the application in full. If you are adding a co-borrower, make sure he or she completes the application as well. When your credit has been approved, Saint Mary's College will be notified by your lender that the application is ready to be certified by the school.
Which alternative loan is right for me?
Only you can truly answer that. Saint Mary's College has developed a preferred lender list (see below) for alternative loans. We have based this list on factors such as prevailing interest rate, customer service, borrower benefits, and fees. Although we strongly recommend these lenders, you may apply for an alternative loan with any lender that offers alternative loans. There are many alternative loans available, so please research your options thoroughly before applying.
Typically, interest rates are based on the current prime rate, LIBOR, or T-bill. These different "base rates" may vary. To check current rates, please follow the link below.
Lenders were surveyed regarding their benefits and rates. This data, coupled with their customer service record, was used to develop the preferred lender list. Saint Mary's College did not accept any promises or offers from any lenders relating to the terms of the loans or any services to borrowers at Saint Mary's College in exchange for that lender being included on our list.
Please note that the lender benefits listed below are accurate to the best of our knowledge. Lenders may modify or discontinue benefits/payment incentives at any time, and other conditions may apply. If you have questions regarding a particular benefit, or if you wish to verify the current benefits with a particular lender, please contact that lender directly. Tiered interest rates and fee structures are dependent on your credit rating.
CHECK FOR UP-TO-DATE INTEREST RATES
Saint Mary's College students and their parents automatically qualify for membership at Notre Dame Federal Credit Union and are therefore eligible to borrow from Notre Dame Federal Credit Union.
This page was updated on Thursday, November 6, 2008.
