Private Alternative Loans for Graduate Students

Private loans offer another mechanism for students to finance the costs of graduate education. As a general rule, these loans are more expensive in the long run than the Federal Student Loans. Therefore, we strongly encourage all students to first apply for federal student loans before utilizing these programs .

In order to comply with recent legislation aimed at providing increased consumer protections to students, borrowers who do not currently have a Free Application for Federal Student Aid ("FAFSA") on file with our office, will need to complete a certication form before we will process a private, credit-based alternative loan.

Choosing a Lender:

We would encourage students who decide to utilize this funding source to review some very valuable information on The Project on Student Loan Debt's website , especially their "Questions to Ask About Private Loans" and the section on "Private Loan Policy Agenda"

You should also review a summary of questions you should ask before borrowing. This information is from the Consumers Union.

The Greentree Gazette has compiled The Student Loan Buying Guide , a comprehensive database with information on financing options through many major lenders.

Students can choose to utilize any lender that best meets their needs. The following links are to lenders that currently allow us to electronically certify loan applications and electronically receive loans disbursements . Students who choose a lender that is not on this list will need to submit all appropriate paper applications to the Office of Scholarships and FInancial Aid for certification.

We are working with Simple Tuition to create a "user friendly" platform for students to use to compare these lenders' products.

General

Citiassist Graduate Loans - these loans are processed through Citibank
Signature Loans - these loans are processed through Sallie Mae

College of Business Administration

MBA Loans - MBA LOANS® program is the only loan program endorsed by the Graduate Management Admission Council® (GMAC®) as part of their mission to promote access to graduate management education.

College of Law

Law Access Loans - these loans are processed through the Access Group
Law Loans - these loans are processed through Sallie Mae
Citiassist Law Loans - these loans are processed through Citibank
Law Loans - these loans are processed through Total Higher Education ("THE")

Other Lenders

We currently do not have the capacity to electronically process loans through the following lenders who have indicated that they plan to offer alternative, credit-based loans to graduate students during the 2008-2009 academic year.

Interest Rates:

Private Lenders can choose between a number of different options in choosing how they will assess the interest they will charge you for your loan. BankRate.com lists most of the major indexes including

Prime Rate - The prime rate is defined by The Wall Street Journal (WSJ) as “The base rate on corporate loans posted by at least 75% of the nation's 30 largest banks.” It is not the ‘best' rate offered by banks. The WSJ is used as the official source of the prime rate. Many (if not most) lenders specify this as their source of this index. The prime rate does not change at regular intervals. It changes only when the nation's “largest banks” decide on the need to raise, or lower, their “base rate.” The prime rate may not change for years, but it has also changed several times in a single year
"LIBOR" - LIBOR is an abbreviation for “ London Interbank Offered Rate,” and is the interest rate offered by a specific group of London banks for U.S. dollar deposits of a stated maturity. LIBOR is used as a base index for setting rates of some adjustable rate financial instruments, including Adjustable Rate Mortgages (ARMs).

Credit Issues:

Lenders may look at your past history in repaying consumer debt in determining the interest rate that they will charge on a private student loan. Major lenders often utilize your "FICO" score.

Understanding your FICO score
Suggestions for improving your score if you have had credit problems in the past
You are entitled to a free copy of your credit report from each of the three major credit reporting agencies once a year. You can obtain these free credit reports from www.annualcreditreport.com . Call 1-877-FACT-ACT (1-877-322-8228) for more information.
Impact of the Subprime Mortgage Credit Crisis on Private Student Loan Programs
- Additional Articles on this Topic:
  - "Panic Is the Enemy" posted on the Higher Ed Watch Blog
  - "The Credit Crunch Takes It Toll" posted on Inside Higher Ed
  - "Congress Urged to Tackle Student Loan Squeeze" posted on The Hill

"Direct to Consumer" Loans

A growing number pf private lenders are marketing private loans directly to students. These loan programs are set up to totally circumvent the financial aid office.

Legitimate lenders should be following basic standards in their dealings with students.

The Department of Education has ruled that these loans must be counted as a resource in determining a student's eligibility for federal financial aid funds. If we discover you have received one of these loans, we will have to adjust your financial aid award to incorporate this loan into your package. This would normally result in the loss of "better" aid funds (need-based grants and scholarships and government subsidized loans). Please speak with your counselor BEFORE pursuing this option.