Alternative Student Loan Questions

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Table of Contents

How soon will I receive my alternative student loan funds?

Once you receive conditional approval, you will complete a promissory note and be required to submit documentation to verify the information on your application. If you return the requested documents quickly, your school should receive the funds in a few weeks. For specific disbursement dates you should check with your financial aid office.

What is my interest rate?

The private loan interest rate is a combination of the Prime or Libor rate plus or minus a margin. The rate will fluctuate as the Prime or Libor rate changes every three months. Some lenders now offer a fixed rate on private student loans. Compare your options when applying.

How is the interest rate calculated for alternative student loans?

The variable interest rate is calculated by adding the stated Prime or Libor rate plus a margin (determined by you and your cosigner's credit worthiness). Lenders offering a fixed rate loan will disclose your rate after you have applied.

Can I defer my payments while I'm in school?

Yes, you can defer your payments for up to 60 months as an undergraduate student. As a graduate student, you can defer your payments as long as you maintain a half time status. Some lenders do require payments while in school - check before you apply. Making payments while in school will help keep your overall debt low and will build good credit.

How much can I borrow with the alternative college loan?

The loan offers an annual maximum of 100% of the Cost of Attendance minus any other aid you receive. The annual Cost of Attendance is determined by your college.

Can I borrow more than the cost of tuition?

Our alternative student loans allow you to pay for education related expenses up to 100% of the Cost of Attendance minus any other aid you are receiving, as determined by your school. You can borrow to cover all education expenses, including tuition, books, room and board and other related expenses.

What proof of enrollment do I need to provide to qualify for an alternative student loan?

You do not need to show proof of enrollment. Your school verifies your enrollment when your lender contacts them regarding your loan application.

What are the different repayment options?

You have three options:

Full Deferral: No principal or interest payments due while enrolled in school (up to four consecutive years). Payment of principal and interest will begin 6 months after graduation, or if no longer enrolled at least half-time. Interest will continue to accrue during the deferment period and will be capitalized (added to the loan balance) at the time of repayment.

Interest Only: Pay only accrued interest while enrolled in school (up to four consecutive years). Payment of principal and interest will begin 45 days after graduation or withdrawal from school.

Immediate Repayment: Payment of principal and interest will begin after the loan is fully disbursed.

Is there a grace period?

Yes. If you choose full deferment, payments do not have to start on your alternative student loan until six months after graduation or dropping below half-time status.

What expenses can the alternative loan cover?

The private student loan can be used to cover education-related expenses including tuition, fees, books, living expenses, a new computer, etc.

Are the funds from the loan sent directly to me?

No, a check will be sent directly to your school. If you have questions about what you can use the funds for, you should check with the financial aid department at your college.

Do I have to be enrolled at least half-time to receive an alternative student loan?

Yes. Borrowers must be enrolled at least half-time in an eligible and participating school in order to receive alternative student loans.

Does your alternative student loan offer any discounts?

Yes! You will receive a 0.25% interest rate deduction for setting up automatic payments from a bank account during repayment.

Is the interest tax-deductible?

Interest on student loans may be tax deductible. Please consult your tax advisor or visit irs.gov for more information.

How long are repayment terms for alternative student loans?

The standard repayment term is typically 10-20 years.

What are the benefits of the alternative student loan?

  • If you choose full deferment, payments don't have to be submitted until six months after graduation or dropping below half-time status.
  • You're not required to make payments while enrolled at least half-time in school.
  • Up to $2,500 in interest may be tax deductible - you should consult a tax advisor for details.
  • Cosigner release is available on most alternative loans. This allows a cosigner to be released from any obligation after a number of on-time payments are made.