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Students who determine that the other types of assistance they have received aren’t sufficient to meet college costs may be interested in alternative (private) loans. Some lending institutions offer these loans to students with no fees, low interest rates and flexible repayment options with no payments due while the students are in school. Others, however, charge origination fees and may require payment of interest while the student is in school. Each lender’s policy is different.
Students should not apply for an alternative loan until they’ve received their financial aid award letters and know what other types of assistance are available to them. Consult the college’s financial aid office before selecting an alternative loan. Many colleges may be able to suggest lenders who have a special agreement with the school to offer reduced interest rates and other incentives. Be aware that the lender will probably perform credit checks, determine income-to-debt ratios, and may require a co-signer when a student applies for an alternative loan.
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