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Alternative Educational Loans

General Information

An alternative, or private, student loan should only be considered after applying for federal financial aid, using the Free Application for Federal Student Aid (FAFSA). A FAFSA can still be submitted even after the semester has started. Visit the Federal Aid First Web site provided by the Department of Education for more information.

If you, the student, decide that you want to pursue an alternative educational loan, click on each heading below for more information before you borrow.

- Items Student and Parents Should Consider Before Borrowing

  • Alternative loans usually have variable, higher interest rates, more restrictive repayment terms, and do not usually offer loan forgiveness when compared to Federal loans.
  • Alternative student loans require a credit analysis. Lenders will look at criteria such as credit history, minimum income requirements, and debt-to-income ratio. These criteria will vary by lender.
  • A creditworthy cosigner may be required.  Even if you can qualify for a loan based on your own credit information, a cosigner may reduce your interest rate.
  • Interest rates and loan terms are subject to change and vary by lender. Review the lender’s Web site for the most up to date information before applying for a loan.
  • Lenders typically send a certification request to the school after you have applied for a loan.  This is done to ensure that a student meets all of the lenders eligibility criteria and that a student does not borrow more than their cost of attendance minus all other aid.  Student Financial Services cannot certify a loan for which you are not eligible.
  • Review your estimated cost of attendance on RAMWeb and/or Budget Calculator to help you determine what you may need to borrow.

- Loan Repayment Comparison

Here are some repayment examples to better demonstrate the costs of different loan types.

 

 Direct Unsubsidized

 Direct PLUS

 Alternative Loan

Loan Balance

 $10,000

$10,000

 $10,000

Loan Interest Rate

 6.8%

 7.9%

 11.5%

Loan Term    

 10 Years   

 10 Years

 10 Years

Monthly Loan Payment

$115.08

 $120.80

 $140.60

Number of Payments

 120

 120

 120

Cumulative Payments

 $13,809.66

 14,495.97

 $16,870.98

Total Interest Paid

 $3,809.66

 $4,495.97

 $6,870.98

These examples assume that any interest accrued is paid while in school/deferred and no interest capitalization occurs. If interest is not paid while in school/deferred, it is capitalized (added to the loan principle at set intervals) and the resulting payment and interest paid amounts will be higher. The interest rate used for the alternative loan is the average found by the study, Paying The Price: The High Cost Of Private Student Loans And The Dangers For Student Borrower done by the National Consumer Law Center.

- Use Caution When Applying

A type of loan that is similar to an alternative loan is a Direct to Consumer (DTC) educational loan. DTC loans usually carry a higher interest rate, have more stringent repayment terms and have higher loan fees compared to school certified alternative loans. If you borrow a DTC loan you must notify Student Financial Services before you begin spending those funds as it may impact your ability to receive federal, state, and institutional aid. Alternative loans can be distinguished from DTC loans because they require school certification and disbursement to the school.

Carefully reviewing the terms and conditions of a loan can help you avoid high interest rates and fees you may regret when it's too late.  Review the Federal Trade Commission and Department of Education Publication, Student Loans: Avoiding Deceptive Offers for more information.

Remember, a loan must be repaid. Selecting a loan without the best terms could end up costing you significantly more than it should.

- Time Frames for Processing

If you decide you want to apply for an alternative loan, your lender will send a certification request to our office and we will review your eligibility based on your lenders requirements. Lenders that use an electronic process for certification and disbursement are much faster than a lender who uses a paper process. Certifications are generally reviewed within 1 week from the day we receive it from your lender.  You will receive an e-mail from us if we have questions regarding your alternative loan.  Watch your RAMweb account to respond to questions. Certifications for the 2013-2014 academic year will begin in July.  You will receive an e-mail from us when we have certified your loan.

If you are applying for summer loan and will be attending at least half-time, try to submit a Summer Financial Aid Application first.  The summer application will inform you if you have any remaining federal financial aid eligibility. Please note that we cannot generally certify loans with disbursements in both the summer, and the upcoming fall term because this crosses financial aid award years.

Provided you are eligible for the loan, funds are disbursed from your lender to your student billing account.  The timing of disbursement will vary from lender to lender.  At a minimum, your loan will disburse no sooner than 10 days prior to the first day of classes or at least three business days from the time your lender sends you the Final Disclosure notice, whichever is later.


Comparing Lenders and Applying

If you still need additional funds or are not eligible for federal aid and need to apply for an alternative loan, you should look for a lender that offers the best terms based on your individual circumstances.

Click on each topic below for expanded content to help you compare lenders.

- Questions for Your Lenders

Before applying, be sure to check the following information on the lender’s website or by calling the lender. Lenders require we review these criteria to verify a student’s eligibility.  These requirements will vary from lender to lender.  Asking these questions first can save you significant time in finding a lender and receiving funds. Student Financial Services cannot certify a loan for which you are not eligible.

 

Is Satisfactory Academic Progress required?

Is admittance into a Degree Seeking Program required?

What is the minimum enrollment requirement (1 credit, Half-Time, Full-Time)?


Before borrowing an alternative loan, here are some questions to ask to help you compare lenders.  This is not an exhaustive list of questions to ask.  Be sure you have all of your questions answered clearly before you authorize a credit check or sign a promissory note.  Student Financial Services has an Alternative Loan Lender Comparison Worksheet available with these questions to help you compare lenders.
 

1. What is the interest rate or what is the expected range of interest rates?

8. What borrower benefits/discounts are available and what is required to qualify?

2. How often is interest on my loan calculated?

9. Can my loan be sold to another company, and if so, will the borrower benefits transfer?

3. How and when does my interest rate change?

10. What are the minimum monthly payments?

4. Are there any loan fees, and if so, are they added or subtracted from the loan amount?

11. When does repayment begin?

5. Is a cosigner required and how does that affect the interest rate?

12. Can the loan be consolidated with other loans?

6. Can the cosigner be released from the loan and what is required to qualify?

13. Are there any early payment penalties?

7. What deferment or forbearance options are available?

14. How long do I have to repay the loan?

- The Application Process

Colorado State University does not endorse or recommend one lender over another and cannot provide a list of lenders because of the wide range terms offered by individual financial institutions.  We encourage you to check if your personal bank offers an alternative loan and to also use mainstream internet resources to search for and review lenders. We will certify a loan through any lender, if you meet that lender’s eligibility criteria

Finaid.org is a non-profit website devoted to financial aid information.  They have a large list of private student loan providers with information about comparing private loans. Finaid.org is not affiliated with Colorado State University and you are not required to use a lender from their website.

Many lenders will require that you have a cosigner to be eligible for a private loan.  Even if your lender does not require a cosigner, you may qualify for a significant interest rate and/or fee reduction by adding a cosigner.  Ask your lender before you apply how a cosigner will affect your loan application.

Self-Certification Form
During the application process, your lender will require that you submit a Self-Certification form to them.  This form will ask for information about your cost of attendance and estimated financial assistance to help determine the amount of your loan.  Your lender may provide the form to you in paper or electronic form.  If you need a Self-Certification form or need the information to complete your lender's form, Click Here.  Please note that this self-certification does not replace any school-certification that your lender may require.

- Loan for a Past Due Balance

If you have a past-due amount from a prior term, you may be able to apply for an alternative loan to help clear your balance.   Generally most lenders require you not have a balance more than 6 to 12 months old to qualify.  These periods of time will vary by lender.

Some lenders may also require you be currently enrolled or attempting to re-enroll in classes to be eligible for a loan to pay your past due amount. Check with your lender to see how your current enrollment and how long your balance has been past due affect your eligibility for the loan.

Please note that registration and/or transcript holds for a past due amount cannot be lifted until funds are received from your lender.