Alternative Loans: Consider all Options

Alternative loans are private loans offered through a lending institution and are not a part of federal student aid programs. 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. 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 direct loan programs.

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.

In stable economic periods, home owners may also consider a home equity loan or line of credit. Since this option is highly dependent on the home loan market, it may not be a viable alternative for most home owners during current conditions. However, 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.

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). Cost of Attendance (COA) information may be found at http://www.csuchico.edu/fa/awardInfo/cost/shtml. On our Web page we state the COA as an annual amount.  Divide that in half if the period of enrollment is for one semester. The form also requires any Estimated Financial Assistance (EFA) for the period of enrollment. If you receive financial aid, you may find your award information by logging into your Portal Account in your Student Center.  Scroll to the section on Finances and click on "View Financial Aid." The difference between the COA and EFA is also required. 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.

Follow a plan. Here are some tips:

• Know the terms. There are many private loan companies with changing terms and conditions. You will benefit from familiarity with loan terms and other financial literacy resources.
• Give yourself options. We highly recommend that the student borrower research and compare three sources of alternative educational loans before deciding on a lender.
• Don’t forget COA. Your total aid from all sources can never exceed CSU, Chico’s cost of attendance.
• Stay with one lender. If you plan to take out alternative loans for successive academic years, it is wise to stay with the same lender for simpler repayment after graduation.
• When are funds available? Alternative loans take up to eight weeks to process. Alternative loans disburse four weeks after certification. Because of processing needs, the first possible payment of an alternative loan will be:
  
  • Fall 2013: First possible disbursement date is September 5, 2013
  • Spring 2014: First possible disbursement date is January 30, 2014

Also see Alternative Loans: Selecting a Lender

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