ALTERNATIVE
LOANS
GUIDE TO PRIVATE LOAN BORROWING
If you decide that you need to use a private alternative loan to finance
part of your educational expenses, we ask that you speak to a financial aid counselor
before applying . Who can borrow a private loan?
Students can borrow them to cover educational expenses that parents are unable
to contribute, parents can borrow them on behalf of their daughter, and parents
can so-sign on a loan their daughter borrows. What is a private
or alternative loan ? Alternative loans are private educational
credit-based loans made by a lending institution. These loans are NOT federal
loans and cannot be consolidated. A number of lenders provide alternative
loan options with different interest rates, fees, repayment schedules, credit
and income requirements. It is important to understand what you are borrowing
and what you will be expected to repay before you borrow. When
is a private loan the right loan ? Private loan borrowing should
be your last resort after you and your family have spoken with the financial aid
office and considered payment plan options and PLUS loans. Typically, private
loans are more expensive than federal loan programs. They are also less flexible
with repayment, and can carry additional fees. All federal loan program loan possibilities
should be exhausted before considering a private loan. This means, if your parent
will consider borrowing a PLUS to cover expenses, this is a much better option.
How is interest calculated? The interest on private
loans is calculated using either 3-month LIBOR or Prime
Rate . Many lenders then add a percentage increase to that rate based
on credit standing. Current LIBOR and Prime Rates can be found at www.interestonlyloans.com
. Should I have a co-signer? Some private
loans are not available to full-time students without a co-signer so you should
check to see if one is required before you apply. If one is recommended,
but not required, a cosigner can often reduce the rates and fees charged by the
lender-- especially if the co-signer has good credit. Credit All
private loans are credit-based loans, meaning the lender will perform a credit
check on the borrower as well as on any cosigner. Whether a loan is approved
or not is often based on your credit score (and the credit of your co-borrower).
Level of fees and interest rate can also be based on credit. It is important
that you do not apply for many loans at once, or apply for a loan for which you
will not qualify. This will only damage your credit score. Consult with
a financial aid counselor to make your best attempt for a private loan the first
time around. This will minimize the impact on your credit. (Back
to top) LOANS FOR
INTERNATIONAL STUDENTS Often, international students do not know
that there are loan funds available to them for study in the U.S. All of these
loans are considered private loans and are at variable varying interest rates.
There are a number of factors that determine a student's eligibility for a private
loan and the rate that she will receive for the money borrowed. Some of the factors
lenders consider are: - If the student borrower has a U.S. citizen or
Permanent Resident who can cosign the loan
- If the student borrower
has established credit in the United States
- If the student borrower has
a social security number
Interest rates and fees associated with
private loans can vary significantly from loan to loan so understanding the terms
of the loan and finding the most financially beneficial source of funding is essential.
Barnard's
policy related to private loans is that each student borrower must speak with
a financial aid counselor before a private loan will be certified by the school
(to certify a loan is to verify a student's enrollment and costs related to study
at Barnard). This is to insure that the borrower, and her cosigner if there is
one, fully understand the terms of the loan, repayment options, and fees. It is
also to insure that all other options have been exhausted first, before resorting
to variable rate private loans.
If you are interested in and believe you
will need a private loan to help finance your studies at Barnard, please give
Financial Aid a call at 212-854-2154 to schedule an appointment at your earliest
convenience. If you and your cosigner are out of town, phone appointments are
acceptable. (Back to top) | 
