So you’ve received your Financial Aid award package, but you still have additional costs. Deciding whether to apply and take an Alternative Loan is a huge decision. But if that is your only choice, there are some things you should know before applying.
1. Do research– find out who offers alternative loans. Check out reviews from other who have taken loans with these lenders. Talk to your Financial Aid Counselor to see if they have any advice.
2. Ask Questions– What is the average interest rate students get? Does the lender offer Forbearance options? Forbearance is when the lender allows the borrower a certain time period where, when the student is required to make payments, doesn’t make those payments. This is usually granted if the student has a financial hardship. What are the lenders Deferment options? Will I be required to make payments on the loan while I am in school full-time? How long does the application process take?
3. You will need a credit worthy cosigner– 99% of Alternative loans will required someone to co-sign the loan with you since most students don’t have credit or have very little credit built. This person doesn’t need to be a parent. It can be anyone that understands what co-signing a loan means; if you default on repayment, they will be responsible to make the payment and it could affect their credit.
4. Is additional information needed in the application process– some lenders require additional documents from both the student and the co-signer. You’ll want to know up front if that is something you’ll need to provide them with.
5. Choose the best lender for you– each lender offers different things, so make sure you are choosing the right lender for you.
Once you have applied and been approved for the loan, the lender will send the university information so that they can certify and post to your student account. The over all process take 4-6 weeks. Once the loan has been posted to your account, allow up to two weeks for those funds to reach the university.