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Alternative/Private Loans
Alternative
loans are credit-based student loans offered by private
lenders. They are available to students who need funds in
addition to their federal aid to meet educational expenses or
for those students not eligible for federal aid. If you have
reached your loan limit for the Stafford Subsidized and Unsubsidized loan programs, but you
still need money for your education, the alternative loan can
help you. Additionally, the alternative loan option is
beneficial to international students and to those students that
are non-degree seeking or may be enrolled for less than
halftime, or to dependent students whose parents are not willing
to take out a PLUS Loan.
Alternative loans are largely
based on the applicant's creditworthiness.
As with the PLUS, the borrower may be eligible to borrow the difference between
the cost of attendance and financial aid (some lenders may have
annual caps on the maximum amount borrowed). Repayment on most
of these loans, however, starts six months after the student
leaves school. Loan terms vary from lender to lender--each uses
its own formula for calculating interest, some lenders charge
fees and others do not, and each company has its own definition
of creditworthiness The interest rate is generally higher than
that of the Stafford Loans, and interest may be capitalized more
frequently. Please check with the lender for more information on
each loan. Before applying for an alternative loan, please
discuss all of your options with a financial aid counselor.
To apply
for a loan, go to the lender web site. Students are welcome
to investigate other loan sources on their own.
Read this
Warning Letter regarding
Direct-to-Consumer Loans.
And please keep the following in mind:
-
Variable vs. Fixed Interest Rates
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Delayed Repayment (in-school deferment) vs. Immediate
Repayment
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Application, Processing, and Disbursement Fees
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Flexible Repayment Options (after school)
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Repayment Incentives (interest rate reduction for
one-time payments, electronic bill payment, etc.)
-
Consolidation
Options
Below is a
list of lenders frequently used by LCC students.
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