Alternative and private loans are applied for by students and/or parents and are designed to supplement or replace federal student aid. You should always exhaust your federal aid possibilities, including the Federal Direct Loans, before applying for alternative loans. It is very likely that the lenders will even have you affirm that you have done this before you can continue their application process. To apply for federal loans, you must first complete the Free Application for Federal Student Aid (FAFSA) at http://www.fafsa.ed.gov.
Below is a link to FinAid private loan listings. FinAid is an independent organization founded in 1994 whose purpose is to provide comprehensive, objective information about student financial aid. While reviewing the lenders on this site, keep in mind that in addition to the alternative loans, some of these lenders may offer Federal Stafford Loans through the Federal Family Education Loan (FFEL) Program. The FFEL Program is equivalent to the Federal Direct Loan Program which we participate in; therefore, Michigan Tech students and their parents are not eligible for the FFEL Stafford or PLUS Loans.
http://www.finaid.org/loans/privatestudentloans.phtml
Visit the lender’s web sites and thoroughly read all literature from the company to determine the loan programs that would best suit your needs. Before borrowing an alternative loan, keep in mind these shopping tips. Alternative loan programs:
- are not federally backed.
- will most likely require a cosigner.
- have varying borrowing limits – yearly and cumulatively.
- may have minimum enrollment requirements.
- sometimes have origination fees or application fees.
- usually have higher interest rates and more stringent repayment terms than Federal Direct Stafford Loans.
- may not have a cap on a variable interest rate or a limit on how frequently your rate is adjusted.
- may have incentives during repayment that do not carrying forward if your loan is subsequently sold to another lender.