Private Student Loans
Private student loans — sometimes known as alternative loans — are options for financing college costs that can bridge the financial gap between college costs and traditional funding sources, such as grants, loans and scholarships.
Private student loans are usually unsecured, which means approval is based on a financial institution’s assessment of the borrower’s ability to repay.
Borrowing an alternative loan is a serious financial commitment. Alternative loans have higher interest rates and most charge fees making them more expensive than federal loan options. Be sure to exhaust all federal loan eligibility before borrowing an alternative loan, including the Federal PLUS Loan. Learn about the Federal PLUS Loan.
If an alternative loan is needed, student borrowers will secure better terms and pricing by adding a credit worthy co-signer to their application. Always check the interest rate, fees, interest capitalization policy, repayment period, prepayment penalties and other terms and conditions of the loan before you sign a promissory note.
Interest rates, loan limits, interest capitalization policy, repayment options and prepayment penalties can vary – sometimes considerably – depending on the financial institution underwriting the loan.