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What are alternative student loans?
Alternative student loans are offered by banks or lending institutions
to help students and parents bridge the gap between the cost of
education and the amount of financial aid received. These are alternative
supplemental loans that are NOT guaranteed by the federal government.
Terms and conditions can vary according to specific lender guidelines.
How much can a student borrow?
The actual amount varies according to each student's individual financial circumstance. Other variables include the cost of attendance, financial aid resources and loan limits imposed by the lender. Remember, you are agreeing to repay your loan regardless of whether you complete your education, are satisfied with your education or are able to find a job. If a student loan is your first borrowing experience, consider this responsibility seriously-your ability to borrow in the future depends on it.
Are there strict requirements to obtain an
alternative student loan?
Unlike federally guaranteed student loans, lending institutions that offer alternative student loans may impose certain requirements. In most cases a student must have a good credit history, a low debt-to-income ratio, and a cosigner may be required. Since a credit check is likely, not everyone is approved for an alternative loan.
Considerations When Choosing a Private Loan
- What is the interest rate for this loan?
- Is the interest rate fixed or variable?
- Is there a cap on the interest rate?
- Are there any disbursement or repayment fees?
- Will the fees be subtracted before disbursement?
- Will the fees be included in any capitalization?
- Will funds disburse directly to the school, or will the check
be sent to me directly?
- Is there a grace period?
- When does repayment begin?
- Is there any penalty for paying the loan off before the scheduled
amount of time?
- What will be my monthly payment amount?
- What will the overall repayment amount be, including interest
assuming full repayment period?
- Will I be able to afford this payment along with other loan
payments?
- Are there any deferment or forbearance options for reenrollment
at another school?
- Are there loan forgiveness, deferment or forbearance options
if I become unemployed or disabled?
- What are approval rates in general for the loan?
- What is the quality of customer service they provide?
Estimate Your Loan Amount
Your alternative loan amount plus financial aid should not exceed
your cost of attendance. The following worksheet will help you determine
the maximum alternative loan amount you should request for the academic
year.
A. Expenses (full year)
Tuition and Fees
Room (if applicable)
Board (if applicable)
Books (estimated)
Personal (estimated)
TOTAL A: |
$____________
$____________
$____________
$____________
$____________
$____________ |
B. Financial Aid (full year)
PELL Grant
SEOG Grant
Perkins & Stafford Loans
Work Study
Other Scholarships/Grants
PLUS Loans
TOTAL B |
$____________
$____________
$____________
$____________
$____________
$____________
$____________ |
C. Alternative Loan Amount
("A" minus "B" equals "C") |
$____________ |
Applying for Alternative Student Loans
Step 1: Undergraduate/Graduate
Students may access Methodist University's preferred
lender list*
Step 2: Once the Undergraduate/Graduate
Student has selected a lender, simply click on the "Apply Now"
option located in the lender's detailed description
to begin the loan application.
Step 3: The Lender will notify
the Undergraduate/Graduate Student of additional documentation needed
or approval of the Alternative loan. The lender will then send a
certification request to the Office of Financial Aid for authorization
of Alternative loan.
Step 4: Undergraduate/Graduate
Students may check the status of the loan by contacting the lender
or by accessing www.elmresources.com.
Understanding the Difference between PLUS Loans
and Alternative Student Loans
| PLUS Loans
- Fixed Federal Interest Rate
- Parents or Graduate Student responsible for repayment
- No debt-to-income ratio or credit scoring analysis required,
must have satisfactory credit
- May borrow up to the total Cost of Education minus financial
aid received
- Wider deferment and forbearance privileges available
- Federally insured against death and disability
- Eligible for Federal Consolidation Program,
capped at 8.25%
- May go into repayment during enrollment, other options
vary by lender
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Alternative Student Loans
- No rate caps: usually Prime Rate + a variable percentage
- Student or parent may be responsible for repayment
- Credit checks more comprehensive
- Borrowing limits vary by lender
- Limited deferment and forbearance options
- Not federally insured against death and disability
- Not eligible for Federal Consolidation Program
(may consolidate through private programs)
- In-school deferment options vary by lender
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Don't miss the repayment difference
Taking a look at the two programs, the PLUS Loan may appear to
be the more desirable option for families, except for the repayment
issue. Many families may want to delay repayment while the student
is in school, and often view alternative loans as their best option.
Since lenders offer an in-school deferment option for Graduate/Professional
students and a forbearance for parents to delay payment, however,
this repayment option may help make the PLUS Loan the better choice.
Self Certification
Federal regulations now require the completion of a Private Education Loan Applicant Self-Certification form for all private education loans. Student borrowers are required to obtain the form and the information needed to complete it from their institution, sign the form and submit it to their lender. The private loan application and disbursement process cannot be completed until the signed Private Education Loan Applicant Self-Certification form has been received by the lender.
If you wish to apply for a private alternative loan, you may obtain the Private Education Loan Applicant Self-Certification form and gather the required information from the Office Financial Aid. Some lenders will prompt you to complete this form as part of your online application process. If so, you will not need to complete a duplicate.
Click here for a list of private alternative loan lenders through which Methodist University students have borrowed during the past award years. The lenders are listed in alphabetical order, and the information provided is accurate to the best of our knowledge. You may choose to borrow through any lender, including lenders not on this list. If you choose to borrow through a lender that is not on the Preferred Lender list, contact the lender for complete details.
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