If you don’t know what a student loan involves or are a high school grad looking for loans to start college I will define it. Student loans help pay for your college and usually they carry a lower interest rate than other loans. You may not need a cosigner or may need to have your parents cosign. If they are supplemented by a student grant they do not have to be paid back. Alternative student loans are a bit different. Alternative loans differ the payment while in school and for 6 months when you get out. This is different than federal financial aid and is an intermediary filling in the gaps and unpaid bills that you otherwise couldn’t while in college.
What are the Benefits of Alternative student loans?
The differed grace period is a big one. Because it gives you time to find a job before your payments start. Another benefit of these alternative loans is no upfront, origination, or prepayment fees. What this means is that the fine print shouldn’t be too small to read and you should be left with a good deal. It is cheaper than an unsubsidized federal loan with lower interest rates by 0.25%. I applied for 2 alternative student loans while in college. One with Sallie Mae and the other with Wells Fargo. Sallie Mae is the better route with easier to work people, but both decisions I am happy with and would recommend.
Where do I find a private alternative loan?
If you have yet to start college, I would talk with the office of financial services at your school. They will give you the best options for your situation and should work with you to find more funding. Otherwise most banks offer alternative student loans. The bailout does not bode well for banks lending and mortgage woes, but they all should be eager to get students on board. Companies I have used and read about that are major players:
Sallie Mae
Bank of America
U.S. Bank
CHELA
Chase
There are many more. If your college has been chosen, go to their financial services or financial dept. on their website and you will find a bunch of information on who the college has a direct relationship with and cheaper rates. At SPU it is US Bank.
What should I look for in a Private Student Loan?
Interest rates, fees, and service can vary drastically among lenders. If the lender offers you borrower benefits that reduces your principal or eventually your interest that is really good. Look really closely at the terms and conditions to make sure you are not getting screwed over. Every year I have been in college it has been great to look at my student financial aid, grants, work study, etc… and then look at alternative loans. My Freshman and Sophomore year I got alternative loans and don’t have to pay them back until the beginning of 2010. I would recommend going this route if finances are tough.
