Alternative Loans are a kind of financial aid that allows students and/or parents to borrow money from banks or other lending institutions to help pay for their education.
These two tools can be a helpful starting point to find possible lenders:
- The first is ELMSelect. This tool will allow you to conduct basic comparisons of different lenders.
- The second is a comprehensive list of lenders used by our students within the past three years.
You are not limited to these lenders. Michigan Tech does not have a preferred lenders list or recommend one lender over another.
We recommend that you visit the web sites and thoroughly read all literature from the lenders to determine the loan programs that would best suit your needs. While reviewing, keep these questions in mind:
- Will the lender require a cosigner? If so, is there a release option?
- What is the interest rate?
- Is the interest rate fixed or variable?
- Will interest be charged while you are in school?
- What are the limits on how much can be borrowed each year and cumulatively?
- Are there any origination or application fees?
- Are you required to exhaust federal aid possibilities, including Federal Direct Loans, before applying?
- Are there any minimum enrollment requirements?
- Are there any satisfactory progress requirements?
- When must you start repaying the loan?
- What repayment options will be available for the loan?
Though there may be some variance between lenders as to the order, there are several general steps that must occur when applying for an Alternative Loan:
- You will start the process by submitting a loan application directly to the lender you have chosen. Most lenders have paperless, or nearly paperless, application processes.
- Once you submit your application, the lender will send you an Application Disclosure.
- When you (and your cosigner) are credit approved, you will receive an Approval Disclosure and Self-Certification Form. Both disclosures will require you to actively accept the terms. You will need information from your Michigan Tech Banweb account to complete the Self-Certification Form.
- Now that you are approved, the lender will contact the Financial Aid Office for our portion of the loan certification.
- Upon submission of the school certification form, you will receive the Final Disclosure from the lender.
- As a final note, you have a three day rescission period from receipt of the Final Disclosure. During this period, you still can choose to cancel the loan.
We recommend that you apply at least four weeks before you need the money from the loan to be available to pay your student bill. Lenders are bound by legislation in the Truth in Lending Act, as well as the Higher Education Opportunity Act, which impose minimum required waiting periods for various steps in the application process. Although the overall processing time by lenders will vary, several weeks is a definite possibility. Be sure to give yourself time.
There are two parts to determining how much money you can borrow using an Alternative Loan – lender credit approval and school certification. The lender will initially determine how much they are willing to lend to you based on the borrower’s and cosigner’s credit report. The lender will then contact the Financial Aid Office to ask us to certify whether you are eligible to borrow that amount. Federal regulations do not allow students to borrow more than their Estimated Cost of Attendance (COA) minus all other financial aid and outside resources. Therefore, it is possible that the lender will initially approve one amount, but Michigan Tech will have to certify that you are only eligible to borrow a lesser amount. In that case, the lesser amount is what the lender will pay out.
The loan period you choose on your application can effect when money is received and how much.
1. If you know that funds will be needed for fall and spring, we suggest completing the lender’s application with a loan period of August through May. If you do:
- We will calculate the school-certified amount you can borrow by using your estimated Cost of Attendance, financial aid, and resources for both fall and spring semesters.
- Your loan funds will generally be paid out in two payments, half for each semester in your loan period.
- Interest will not accrue on the second half until the funds are actually disbursed, so there will be no penalization for completing just one application.
2. If you prefer to complete a separate application for each semester, then you should use a loan period of August through December (fall semester), January through May (spring semester), May through August (summer semester). If you do:
- We will calculate the school-certified amount you can borrow by using half the annual estimated Cost of Attendance and only the aid and resources pertinent to that semester.
- We will request that the lender send all funds in one payment when a student chooses a one-semester loan period.