Alternative Educational Loans, also known as Private Educational Loans, consist of any student loan that is not a federal student loan. Alternative loans are available from banks and private loan companies and offer additional financial assistance to students if they have exhausted all other sources of funding for their education. These loans are meant to supplement federal and state aid when the Cost of Attendance (COA) is not fully covered by these programs. Students who need additional funds beyond what they qualify for in federal student aid (including Federal Direct Loans) or students who are not eligible for Federal Direct Loans may wish to apply for an alternative education loan.
Alternative loans should only be considered after applying for federal financial aid using the Free Application for Federal Student Aid (FAFSA). A FAFSA can still be submitted even after the semester has started. Visit the Federal Student Aid website provided by the Department of Education for more information.
If you are considering borrowing through a private lender, we encourage you to:
If you decide to pursue a private loan, you must apply directly through the lender. You are free to choose any lender you wish. Each lender will have varying eligibility criteria and available loan terms.
How to Apply
Questions to Ask Before Applying for an Alternative Loan
Items That Students and Parents Should Consider Before Borrowing
Loan Repayment Comparison
Here are some repayment examples to better demonstrate the costs of different loan types.
These examples assume that any interest accrued will be paid while in school and no interest capitalization occurs. If interest is not paid while in school, it is capitalized (added to the loan principle at set intervals) and the resulting payment and interest paid amounts will be higher. The interest rate used for the alternative loan is the average found by the study, ‘Paying The Price: The High Cost Of Private Student Loans And The Dangers For Student Borrowers’ by the National Consumer Law Center, March 2008.
Several loan comparison calculators are available online:
Use Caution When Applying for Loans
Carefully review the terms and conditions of any loan to help avoid high interest rates and fees you may regret when it's too late. Remember, a loan must be repaid. Selecting a loan without the best terms could end up costing you significantly more than it should. UAA cautions students that loan debt can accumulate quickly and may result in a lifetime burden of high payments and credit denials for expenses like automobile purchases, credit cards, and home mortgages. To avoid these problems, read and understand the terms and conditions of all loans.
Students should avoid lenders that do not require UAA certification of their loan application and, in general, should be suspicious of unsolicited loan offers. Review the Federal Trade Commission and Department of Education Publication, Student Loans: Avoiding Deceptive Offers for more information.
Time Frame for Processing
If you apply for an alternative loan, your lender will send a certification request to our office and we will review your eligibility based on your lenders requirements. Lenders that use an electronic process for certification and disbursement are much faster than lenders who use a paper process. Certifications are generally reviewed within 1 week from the day we receive it from your lender. You will receive an e-mail from us if we have any questions or concerns regarding your alternative loan. Once we have certified your loan, you will receive a final Disclosure from the lender. At this time you have a 3 day rescission period from receipt of the Final Disclosure. This rescission period allows you to cancel the loan without penalty if you change your mind.
Give yourself plenty of time! The new Truth in Lending Act requires additional processing steps that include a three day waiting period after the necessary disclosures have been completed and before the loan can be disbursed. Depending on the lender, this can add an additional 3 to 7 days from time of application to disbursement.
Provided you are eligible for the loan, funds will be disbursed from your lender to your student account. The timing of disbursement will vary from lender to lender. At a minimum, your loan will disburse no sooner than 10 days prior to the first day of classes or at least three business days from the time your lender sends you the Final Disclosure notice, whichever is later. Be aware that the overall processing time may vary depending on your lender and that a processing time of several weeks is a definite possibility.
Code of Conduct
UAA is unable to provide guidance as to which alternative loan best meets your specific needs and does not endorse or recommend any alternative education (private) loan company. The University of Alaska Anchorage receives no benefits from any lender. See the University Alaska Anchorage Financial Aid Code of Conduct for further information.