Private Loans or Alternative Student Loans are available for families seeking additional financing options. Alternative Loans are non-federal loans that are in the student's name, and in most cases, require a cosigner. Union College encourages parents to first consider the Federal Direct Parent PLUS Loan to cover any outstanding educational expenses prior to considering an alternative loan. In general, a Direct PLUS Loan provides preferable interest rates and more flexible repayment options, as well as options for loan cancellation that are not offered by most alternative loan products.
If you choose to pursue an alternative loan, be sure to compare the costs associated with various loans before completing an application. Interest rates, fees, repayment periods, and other benefits can vary significantly among loans. While many educational loans are available with no fees and interest rates less than 10%, other programs have fees over 5% and interest rates over 14%. These high rates can result in several thousands of dollars in additional costs.
To help you compare the various alternative loans, consider asking potential lenders the following questions:
- What is the interest rate? Is it fixed or variable? and how is it determined?
- How often is the interest rate adjusted?
- How much are origination fees and how are they charged?
- Will I be required to pay the interest while enrolled in school?
- When does the interest rate start to accrue and will it be capitalized?
- When does repayment start? Is there a grace period before repayment begins?
- What is the monthly minimum payment?
- What is the maximum repayment period?
- Am I allowed to pay on the interest while I am in school?
- Are there any loan repayment benefits or reductions? If so, will they remain if a future payment is late?
- Can I defer repayment of the loan if I go to graduate school?
- Do you apply any penalties or charges for prepayments or early payoff?
Please note - lenders may have several different kinds of loans that you can choose from. If the loan proceeds are paid directly to the student rather than the school, this is called a "Direct to Consumer Loan." Generally, these are not the best loans. They often carry higher interest rates and/or charge higher fees up front. This type of loan is inviting because it is often easier to apply for and disbursement is sooner. Direct consumer loans often do not have the normal protections and payment provisions of a regular school loan certified by the school and disbursed to the school. Be careful if you are choosing this type of loan, they were created for non-degree seeking students who cannot get regular school loans.
You will find more information about alternative loans here.
To review Union College's Code of Conduct regarding private loans and student choice, please click here.