Alternative Student Loans

When you fill out a FAFSA, you are applying for federal government aid to help fund your college education. You can get a hold of several different sources of money this way, including grants and several forms of FFELP federal loans, such as the Stafford, Perkins, and PLUS loans. However, as you add up the sum of these student loans, you may realize that they only cover a fraction of your educational expenses. Alternative loans can help you in covering the costs of college with low interest rates and long term repayment options when federal funding options are exhausted.

There are a number of sources from which you can obtain alternative student loans, with some offering better terms than others. However, when working with private lenders, it is crucial to remember that you shouldn't expect to get the best interest rates, since banks and other financial institutions focus on profiting from lending money. Therefore, if you are going to make use of such sources, it is best to shop around for the best rates and the lowest fees.

On the other hand, most states have a government organization that offers alternative student loans very similar to federal funding by using the same tax exempt state educational bonds. Such loans typically have very low interest rates, are free of lending fees, and have flexible, long-term repayment options that are similar to or even better than those offered through federal plans.

Keep in mind that the majority of alternative student loans are credit-based, meaning that students who apply will need to have a good credit history or a co-borrower with excellent credit and a low debt-to-income ratio. Most of these loans are contingent upon students being enrolled at least half time in school and do not require repayment until the end of a grace period following graduation. Many offer further interest rate cuts as a reward for continuous payments being made on time, or for direct withdrawal payments. These terms can also include the ability to release your co-signer after a certain period of time.

Paying for school is not easy, but we are here to help. OEDb's student finance section will help you find the money you need to pay your tuition and other college expenses. We cover scholarships, college grants, and student loans. Scholarships and grants are both forms of "free money", meaning they don't need to be paid back. Scholarships are typically awarded by businesses or individuals, with the money being earmarked specifically for tuition. They can be awarded based on a student's location or by religious affiliation, such as Catholicism or Islam. Grants are typically awarded by governments or non-profit organizations and the money often can be applied to several different expenses a student may incur, not solely tuition. They can be awarded based on location or ethnicity, for instance African American or Hispanic. Loans are not considered "free money", because unlike scholarships and grants, they do need to be paid back after graduation. Common federal loans include Perkins and Stafford. Loans are also available by location.