Such loans can fill a funding “gap.” Often such a “gap” is created when a student is awarded a Stafford or Perkins loan, and then realizes that the amount in the loan does not fully cover all of the student’s expenses.
The Lenders of Alternative Student Loans
The lenders of alternative student loans have put their loan applications online. Those applications are for secured loans. The lenders thus seek some “security” when providing a student with loan money.
Students can easily download an application for one of the alternative student loans. Once downloaded, the application can be filled out and sent to the prospective lender. One word of warning: Students should study the details on the alternative student loans before submitting any application.
The lenders of the private, alternative student loans hope to profit from their ability and their willingness to loan money to college students. As a result, they often attach stiff fees to the loan. Those fees are sometimes paid at the time of the loan application.
In other instances, lenders have added those fees to the interest rate for the student’s loan.
Comparing Different Alternative Student Loans
Students who want to compare the offering of the various lenders might feel like they are comparing “apples and oranges.” Students might wonder how a high fee and lower interest compares to a low fee and a higher interest rate.
Students should remember this: a 3% fee is equal to a 1% rise in the interest rate. When keeping those facts in mind, students can better compare the various alternative student loans.
Students might also consider how quickly they can obtain the loan. The Act private loans are fast, and they do no require the completion of a FAFSA. Still, students should take note of the fact that awarding of the Act private loans is based on the applicant’s credit.
Different lenders have different repayment options. The student in need of a loan should study those options. An ideal lender is willing to defer payment until after the student has graduated.
Some lenders, such as Astrive, give student loan recipients an opportunity to refinance any of their alternative student loans.
The Best Time to Go After Alternative Student Loans
Unlike many student loans, the money for the alternative student loans is sent directly to the student, not the institution that he or she is attending. Students are not encouraged to look at alternative student loans as a “first choice,” when searching for a way to pay for a college education.
Not infrequently, a student with a Stafford Loan will “max out” on that loan while still in school. If he or she hopes to continue and finish his or her education, then that student needs to look at the alternative student loans.
The same student might also want to consider getting a PLUS loan.
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