Alternative (Private) Loans

Many lenders such as banks, credit unions, or other financial services companies offer non-federal, private education loans. Students whose parents do not want to borrow a Parent PLUS Loan may want to consider borrowing from a private lender.

Be advised that many lending institutions will not approve your loan request if you are not making Satisfactory Academic Progress. Call the Financial Aid Office if you are in this situation.

Other potential problems include: prior debt, being enrolled in a certificate program, being enrolled in less than 6 units (undergraduate), or 5 units (graduate), or being a transitory student.

However, be careful when looking at alternative loans!

  • Private lenders may charge higher interest rates and fees compared to federal loans, and the interest rates are frequently variable.
  • Repayment terms are usually not as favorable for borrowers.
  • Approval of private loans is typically based on your credit rating and debt-to-income ratio.
  • Alternative loans more often than not require a co-signer, someone who promises to repay the debt if you are unable to do so.

The terms and conditions of federal loans are in general more favorable than alternative loans. However, if after exhausting all sources of federal funding you decide to borrow a private loan, ask questions and compare lenders to ensure you are making the best, most cost-effective choice. Additional information is available via the Federal Student Aid website.

For information about alternative (private) loans, see:

Research lenders

If you must borrow from a private lender, do your research. Compare interest rates, up front loan costs, and repayment terms.