There are situations in which the gift aid and Stafford Loan eligibilities that students receive as part of their financial aid packages are not sufficient to cover the costs associated with attending college. In these situations, students may wish to pursue private, credit-based alternative loan funds.
This information isintended to serve as a starting point for students who wish to pursue private, credit-based alternative loan options. It is not an endorsement for any credit-based loan program.
What is a private, credit-based alternative loan?
A private credit-based alternative loan is a loan that students can use to help them "fill the gap" between their educational expenses and financial aid that is awarded to them through gift aid and the Stafford Loan program.
How is a private, credit-based alternative loan different than a Stafford Loan?
Stafford Loans are guaranteed loans. This means that students can obtain these educational loans regardless of their credit history. Some of the benefits of the Stafford Loan program include:
- No interest of Subsidized Loan funds while the student is enrolled at least half time.
- Possibility of deferment and/or forbearance of loan payments.
- Lenders tend to be more willing to work with students if they experience financial hardships during repayment.
How do I know if I need a private, credit-based alternative loan?
When a student completes the Free Application for Federal Student Aid (FAFSA), the Financial Aid Office will use that information to determine his/her eligibility for grants and Stafford Loans. Once you receive your award information, you will be able to subtract your costs from the amount of grants and other gift aid and Stafford Loans that have been awarded to you. If there will be a balance due that you cannot pay out-of-pocket, you may wish to consider a private, credit-based alternative loan program.
If I decide that I want to pursue a private, credit-based loan, how do I know how much to request?
Determine your cost of classes (and room and board if you are a Fayette Campus student). You would then want to add any books, travel expenses, or other educational expenses that you expect to incur. You will want to subtract the amount of financial assistance that was awarded to you in gift aid and Stafford Loan funds. That will be the amount that you would owe for your educational expenses. This would provide you with a good estimate of the amount of loan funds that you may wish to request.
What happens if I am approved for a private, credit-based alternative loan?
Once you have been approved by a lender for a private, credit-based alternative loan, the lender will notify the Financial Aid Office. The amount of credit-based alternative loan funds that you are eligible to borrow will then be determined by subtracting the gift aid and Stafford Loan funds that you are receiving from the budget that was used to determine your financial aid eligibility. The lesser of your request or the remaining budget will be the amount that the certification of your private, credit-based alternative loan will be completed for.
There are many lenders who offer private, credit-based alternative loan funds for educational purposes.
Below are a list of things you should consider when determining which lender you wish to pursue a private, credit-based alternative loan with:
- Will I be required to obtain a cosigner?
- What is the origination fee (percentage of the amount borrowed charged for issuing the loan to you by the lender)?
- What are the interest options? Is the interest a fixed rate or adjustable rate?
- Can I make payments on the loan while I am still enrolled in school
- Are there any penalties for early repayment of the loan?
- Are there any incentives for making repayment on time or having payments automatically deducted from a checking or savings account?
The most important questions that you should ask yourself before pursuing a private, credit-based alternative loan program:
- Do I really need to borrow these funds?
- Will I be able to make the monthly payments on this loan when I go into repayment?
Students are free to pursue private, credit-based alternative loan funds with the lender of their choice.
While Upper Iowa University does not endorse any specific private, credit-based alternative loan program, below are a list of some of the most popular lenders that students have used in the past.
As a borrower, you will need to educate yourself regarding their lending policies to determine whether the lender that you select will fit your borrowing needs.
Sallie Mae Signature Loan, https://opennet.salliemae.com/apploansummary/?school_id=00189300&InstLndrID=900905&AlternateLogin=Y&loanprogram=SIGNATURE
US Bank Gap Education Loan, https://www.usbank.com/supploans
Wells Fargo Collegiate Loan, https://www.wellsfargo.com/student/undergrad/collegiate/
Disclaimer:
The financial aid programs are designed to financially assist students seeking a degree in higher education. We hope the information available here will assist you in discovering your financial aid opportunities at Upper Iowa University. Our staff is available to assist you in achieving your higher education goals at Upper Iowa University.
