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Alternative Loans
If the federal and state educational loans you and your child receive aren’t sufficient to meet college costs, you or your child may be interested in checking out an alternative, or private, loan. Some banks and lending institutions offer these loans to students with no fees, low interest rates and flexible repayment options, with no payments due while in school. Others, however, charge origination fees and may require payment of interest while in school. Each lender’s policy is different. Check out a few options with your child before making a decision.

Your child should not apply for an alternative loan until after financial aid has been awarded. Have your child consult the financial aid office at the college before selecting an alternative loan. The financial aid office may be able to suggest lenders which offer alternative loan programs that suit your student's financial needs. If you or your child do apply for an alternative loan, be aware that some lenders may perform credit checks; determine income-to-debt ratios; and, if the loan is in your student’s name, may require you to serve as a co-signer.

The U.S. Department of Education (ED) and the Federal Trade Commission (FTC) offer Student Loans: Avoiding Deceptive Offers, which is a free consumer guide for college students (and their families) seeking new loans or consolidating existing loans. The National Council of Higher Education Loan Programs, Inc. (NCHELP) provides two guides, "Private Student Loans, A Guide to Responsible Borrowing" and "Private Student Loans, Understanding the Cost of Borrowing," both containing beneficial information about private loan borrowing.

Additionally, Student Lending Analytics, an independent research and advisory firm, makes available two guides designed to assist students and parents in making informed decisions about alternative/private loans. The 2008 Guide to Alternative Loans provides information about alternative loans in a Q & A format, while Private Student Loan Options is a listing of alternative loan providers. The lenders which appear on this list were those most frequently cited on over 700 2- and 4-year institutions' preferred lender lists. More information is available on the FinAid!® Web site, which provides information about student loan comparison sites, including minimum standards to be used in determining the usefulness of the sites, and links to available sites.

The accessibility of these lists on this site should not be construed as ISAC's endorsement of any lender that appears on the lists.

© 2003-2012 Illinois Student Assistance Commission