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Alternative Loan Programs for Undergraduate Students

Private alternative loan programs have grown in popularity in recent years. We would encourage families to explore their eligibility for all federal loan programs before turning to this resource. In almost all cases, Federal Student Loans will provide the consumer with more beneficial terms and conditions, including a lower annual percentage rate charged on the principal and fewer and lower fees.

We would also like to stongly encourage students to utilize the tools in the Managing Your Finances section of this website. Look at ways to cut down on your costs while in school.

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.

Families may be seeing reports in the media which speculate about the impact of the subprime mortgage credit crisis on the availability of students loans. Please review the information in this section for more information

Choosing A Lender:

FinAid:The Smart Student Guide to Financial Aid provides a comprehensive overview of how these programs generally operate as well as a detailed comparison chart for the major loan programs. Their Loan Analyzer Calculator will help families compare the terms of different loan programs.

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

Student Loan Analytics has released their 2008 Guide to Alternative Loans . The SLA guide breaks down the complexity of alternative loans through a plain English, Q&A format .

Families are free to choose any lender which best serves their needs.

You should visit each potential lender's web site to fully evaluate the benefits that they offer before making a final choice of a lender for your loans. Many programs may be changing the terms of their loan products for the 2008-2009 year.

You should also review a summary of questions you should ask before borrowing.

We are working with Simple Tuition to provide families a simple student loan comparison tool that will compare the benefits offered by major lenders utilized by our students in recent years..NOTE: The website will also give you the option to display the information from ALL lenders in their database.

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Programs Available During 2008-2009

The following lenders have indicated that they intend to offer private, credit -based loans to students during the 2008-2009 academic year. Due to recent legislation as well as current economic conditions, some lenders have not finalized the terms of their programs for the upcoming academic year.

We are working with Simple Tuition to provide students with a simple student loan comparison tool that will compare the benefits offered by major lenders utilized by our students. NOTE : The website will also give you the option to display the information from ALL lenders in their database.

We can currently electronically certify and receive disbursments through the following lenders:

Based on information provided by several of these lenders, we have created a chart that summarizes some of the major provisions of each of these programs. Use this as a starting point as you begin to research your loan options.

Additional Lenders

We currently do not have the capacity to electronically receive loan disbursements 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. If you choose to utilize one of these lenders, you will be contacted by the Bursar's Office once your loan check arrives on campus.

We encourage families to visit each lender's web site to check on the benefits that they offer .We have not received any financial incentives from these lenders in exchange for highlighting them on this website . Lenders are listed in random order each time this page is displayed in order to comply with recent federal legislation that dictates that we only can provide "Lender Neutral" lists (alphabetical lists are apparently not "lender neutral").

Based on information provided by several of these lenders, we have created a chart that summarizes some of the major provisions of each of these programs. Use this as a starting point as you begin to research your loan options.

Interest Rates:

Private Lenders can choose between a number of different options in choosing how they will asses 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.

Most lenders will offer a lower interest rate to students who have a "credit-worthy" individual willing to co-sign their loan application. An individual who co-signs your loan application will be held legally responsible if you fail to repay your student loan.

 

"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 families.

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.

"Peer to Peer " Lending Programs

These new programs are starting to receive coverage in the media. Families should CAREFULLY review the terms of loans through any of these programs. We would again encourage families to fully utilize all federal aid programs before turning to this source of funds.

Companies Features in these Stories:

Other Financing Options

We would encourage families to consider utilizing one of our interest free-monthly payment plans as a way to minimize the ultimate interest charges associated with utilizing private loans. The Borrow Smart Program offered through Tuition Management Systems allows you to perform a detailed comparison utilizing information from lenders offering products to the Loyola community.

 

Updated September 30, 2008