Alternative Loan Programs
Students may find that the combination of federal loans,
employment and grants they receive may not cover their entire
costs. They may need to pursue other options to finance their
education. Students should keep in mind that alternative loans work
differently than their federal counterparts.
Overview
Here is some important information on alternative loans:
- Alternative student loans are credit-based and require a credit
check which determines your eligibility and your interest
rate.
- Lenders have varying requirements for credit scores and often
add fees (both front-end and back-end) and sometimes reject loans
for those students who have bad credit or no credit. However,
students who have a co-signer with good credit can sometimes gain
approval and/or get a better interest rate than they could on their
own.
- It is recommended that you only apply one time with a lender
each year. Allowing lenders to check your credit is called an
"inquiry," and can have a negative effect on your credit if you've
had several inquiries in the last six months. Inquiries can be
anything from seeking a car loan to opening up an account at a
department store, for example. Be sure to research the benefits of
each loan program and choose the one that best fits your needs
before applying.
- While alternative student loans carry a higher interest rate
then federal loans, their rates are typically lower than a personal
loan or a mortgage and definitely lower than credit cards.
Caculating Your Allowable Maximum Funds
The amount you can borrow in alternative loan funds is
determined by taking your budget and subtracting
any financial aid you've already been awarded, as
listed on your Award Letter.
Your budget includes allotments for:
- Tuition
- Books and equipment
- Living expenses
Your financial aid includes (if awarded):
- Direct Loans
- Perkins Loans
- Parent PLUS loans (for students identified as "dependent" on
the FAFSA)
- Scholarships
- Graduate PLUS loans
- College Work Study
For example, if your budget is $35,000 and your financial aid is
$30,000, you're eligible for $5,000 in alternative loan funds.
The lender you select may approve you to borrow more money then
you are eligible to receive. The Financial Aid Office is required
to complete a certification form for you to return to the lender.
This is to certify that you are receiving the allowable maximum
from federal aid programs. If you are unsure as to how much you can
request, feel free to contact the Office of Financial Aid and a
counselor would be happy to let you know the exact amount.
Finding Lenders
Lenders that NUHS students have used in the past are listed at
Fast Choice. Should you wish to
apply and you have additional questions, please stop by the
Financial Aid Office to speak with a financial aid counselor.
FAQs
Below are some questions to ask if you are considering an
alternative loan option:
- Do you offer any benefits and how do I qualify
for them?
Some benefits are automatic (meaning you won't
have to do anything to qualify for them) while others require you
to sign up for something (like ACH payments or electronic-only
statements) to realize the benefit.
- What is considered a late payment?
This is an extremely important question to ask
because many benefits are only available after x-number of
"on-time" payments. What exactly does on-time mean? Is there a
window of time when a payment must be received, or does the lender
need to have your check in hand on the due date? Note: it is
extremely easy to be "late" on one payment, especially if you have
just entered repayment and have not yet set up your payments to
deduct automatically from your checking account.
- Do you have lifetime servicing of your student
loans?
Legally, lenders can sell their loan portfolio to secondary
markets if they so choose (as long as they notify their borrowers
in writing of the sale). What happens to your repayment incentives
if your loans are sold? How comfortable are you working with a
lender that has no intention of seeing your loan through to
payoff?
- Do I really need to take out other loans besides
Direct Loans?
Keep in mind that each loan program you borrow through will
require a minimum monthly payment. It might be worth sticking with
one lender for your borrowing needs each year; however, if loan
terms change from year-to-year and are significantly different, you
can borrow from more than one lender. Keep good records of these
transactions, as you are ultimately responsible for keeping track
of all loan obligations.
This is not a complete list of questions you should ask, but it
should get you started on the road to selecting a lender for your
alternative loans. If you have any questions about this process,
please contact the Financial Aid Office.