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Alternative Student LoansHow to Find Alternative Student Loans
By: Brent Walter
If you haven't pursued all other avenues, such as federal aid programs, scholarships and grants, you need to before you start looking for alternative student loans. Alternative student loans usually have higher interest rates and less favorable terms than federal student loans (FinAid). So, if you don't use the other sources first, you'll end up paying a lot more than necessary for your education. If you haven't already, fill out and submit a Free Application for Federal Student Aid, also known as a FAFSA. That one application will apply you for all federal student aid programs. If the award package isn't enough, then you can look for alternative student loans. Assuming you have already gone through the FAFSA process and looked at PLUS Parent loan options, it's time to start looking for alternative student loan lenders. Because alternative student loans are offered by private lending institutions, such as banks, credits unions and savings and loan associations, you'll have to compare the prices and terms of various lenders. There are no set interest rates or standard terms like those of the federal loan programs. It's a free market where competition sets the rates. But before you start calling every bank in the phone book or browsing hundreds of Web sites, you should talk to your financial aid office. Most financial aid offices will have a list of preferred lenders who offer fair student loan programs (College Board). Although the list is a good place to start, don't limit your options to only the lenders on the list. Do some investigating on your own because the better deal you can find, the more money you will save. To help you compare offers for alternative student loans, here is what you should look for:
With the perfect lender selected, it is time to apply. You'll need to either have an application mailed to you from the lender or fill one out online from the lender's Web site. The application process is easy compared to completing a FAFSA, and your financial aid office can likely help you if you run into any problems. In fact, your financial aid office may even be required to complete a portion of your application and approve the loan. Once the application is completed, either you or your school needs to submit it to the lender for processing. When you receive the results, all you'll have to do is ether accept or decline the offer. It's that easy. If you would like more information about alternative student loans and other types of student aid, read our Student Loan Guide. There you'll find additional resources and information about paying for college. Sources:
College Board. "Dealing with the Financial Aid Office." CollegeBoard.com. http://www.collegeboard.com/student/pay/ways-to-pay/485.html (accessed August 4, 2006). FinAid. "Private Student Loans." FinAid.org. http://www.finaid.org/loans/privatestudentloans.phtml (accessed September 16, 2006). Rensselaer. "Private Student Loan Programs." Rh.edu. http://www.rh.edu/finaidhb/privstudlnprog.html (accessed September 16, 2006). |
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