Alternative/Private Education Loans
Certifications of Alternative/Private Education loans take up to eight weeks to process. All certification requests received by June 26, 2015 will be certified by the Fall fee payment deadline of July 29, 2015 if your file is complete (all other awards accepted or declined AND all “To Do List items” have been completed).
Fall 2015: First possible disbursement date is September 3, 2015
Spring 2016: First possible disbursement date is February 4, 2016
Alternative loans are private loans offered through a lending institution and are not a part of federal student aid programs. Alternative loans take up to eight weeks to process and disburse four weeks after certification. Interest rate and repayment provisions vary from lender to lender. It is the responsibility of the student to research and understand the implications of borrowing an alternative educational loan. Keep in mind that alternative loans, along with other aid and educational resources, can never be more than the cost of attendance.
Think FAFSA first. We strongly encourage students to file a Free Application for Federal Student Aid (FAFSA) to determine their eligibility for federal student aid and Federal Direct Stafford Loans before considering alternatives. While there is a great range of private educational loans available, we do not recommend alternative loans in most cases, as they do not have the beneficial aspects of Federal Direct Stafford Loan programs. If you need to pursue a private loan, make sure you get all the facts.
Consider other alternatives to private educational loans
For dependent undergraduate students, we advise parents to consider the Federal Direct PLUS Loan to assist in meeting the cost of attendance, rather than having the student take on additional loan burden at less favorable rates. Download information and an application.
Home owners may also consider a home equity loan or line of credit. This alternative may provide a lower interest rate for some families than a private educational loan, and interest paid may be deductible on tax returns.
When the best plan for you is to pursue an alternative educational loan
While the Financial Aid and Scholarship Office places no restrictions on a student borrower’s choice of lender, we do want you to make a wise choice. Always proceed with caution and be a savvy borrower by researching the best loan products and by getting clear information from lenders on the impacts of both short and long-term borrowing with them. We highly suggest you visit FinAid.org for detailed information on Alternative Private Student Loans including a Private Student Loan and Lender Comparison Chart.
Private Education Loan Applicant Self-Certification Form
All students who apply for an alternative loan are required to submit a Private Education Loan Applicant Self-Certification form before their lender can complete the processing of their loan and disburse funds. A Self-Certification form will be provided by the lender with whom you are working, or you can download one here.
Section 2 of the Self-Certification form asks you to complete information on the CSU, Chico Cost of Attendance and other financial aid you receive (if applicable).
If you have questions regarding your Self-Certification process, please contact your lender directly. If you are unable to locate the necessary information to complete the Self-Certification form, please contact our office.
Selecting a Lender: Get the Facts
- Who is the lending institution?
- Are they an established lender with a good track record?
- Will they keep the loan, or, if they sell it, to whom?
- Who will provide loan servicing after disbursement?
Although a student borrower or their family may have a relationship with a lender that provides educational loans, it is wise to shop around and compare loan products. We highly suggest you visit FinAid.org for detailed information on Alternative Private Student Loans including a Private Student Loan and Lender Comparison Chart.
Interest rate and loan fees
- What type of interest rate is being offered?
- Can the interest rate change and, if so, how frequently?
- When and how often is accrued interest capitalized (added to the loan principal)?
- Is there a ceiling or “cap” on the rate? If yes, what is it?
- Are there prepayment penalties or fees?
- Understand the terms. You will benefit from familiarity with loan terms and other financial literacy resources.
Shop around for the best overall loan. Many lenders advertise only their best rates, a rate not all borrowers will qualify for. Research the loan terms and conditions and ask about the interest rate and loan fees and how they are determined. Loan fees can vary as well, so compare how the combination of interest rate combined with loan fees affects the “cost” of the loan.
Rule of thumb: The stronger an individual’s credit rating, generally the lower the interest rate and loan fees are, and having a co-signer can help even if it is not required. Ask the lender if they offer a co-signer release and, if they do, how to qualify?
- Are representatives easy to contact and are they knowledgeable?
- Will the lender be servicing the loan, and, if not, who will be?
- Is online account access available after the loan is issued?
Billing and repayment
- When will repayment begin?
- How much will the payment be?
- Are there different payment plans?
- How long is the repayment period?
- Are there allowable situations which qualify for “deferral” (postponement)?
- Are there borrower benefits or repayment incentives? If yes, how do you qualify? How could you lose these benefits?