of the ARTS 2008/2009
Private/Alternative
Loans are private bank loans for students, designed to help meet the gap
between the costs of attendance and financial aid. These loans are not guaranteed by the federal
government, therefore, they can carry different fees and rates. Careful research is suggested. We encourage all students to first apply for
federal and institutional financial aid before considering a private student
loan. Borrow only what you need, this is a loan and must be repaid. It is in your best interest to read all
information regarding any loans.
Students and/or cosigner must be a
A credit check is required. Applicant and/or cosigner must have good credit history and debt-to-income ratio. Contact your lender regarding their individual credit requirements. Sometimes cosigners can reduce the cost of the loan. Does your lender offer a cosigner release after the borrower has demonstrated a satisfactory payment history? Will the lender require the borrower to re-apply for the loan at this point or simply eliminate the cosigner?
You may borrow up to the full cost of education, less any other aid received during the academic year. Please borrow wisely. Keep in mind that you cannot consolidate private alternative loans with your federal Stafford Student Loans. Be aware of the aggregate loan limit (total amount you can borrow throughout your education). Most lenders have an aggregate that includes all loans borrowed, including the private loan balance. Refer to the Budget Worksheet to assist in calculating the amount of funds you will need to borrow.
Each lender has their own rate structure. You must contact each lender individually. You should
also ask your lender when they capitalize the interest on their loans. Capitalization is when any interest is added to your principal balance. Is interest capitalized annually? At repayment? Annually makes the loan more expensive than only once at repayment.
The APR is the annual cost of your loan including the effect of any fees and charges in addition to interest. The APR is determined based on the terms of the loan. APR’s will differ based on the terms and loan amount. Make sure you are comparing the like loan amounts when comparing APRs to receive a true comparison. If the rate is variable, the APR may be increased or decreased after consummation of the loan. Take these terms and APRs into consideration when borrowing an private/alternative loan.
Most private lenders allow borrowers to begin repayment after graduation. You must contact each
lender individually for their policies. You will want to know if they offer a grace period, if so, how long? How long is the repayment period? A longer period reduces the amount of your monthly payment but increases the amount you will pay over the life of the loan. Do they offer different repayment options? Deferments? Reduced interest rates for on-time payments?
There are no origination or guarantee fees, even for cosigned loans. For more information on fees,
contact the lender as some do charge up to 9% of the amount of the loan in fees.
Private educational loans are usually disbursed electronically. It is CalArts policy to request two disbursements, one in September and another in January. Do not expect any type of refund of your loan until three days after the first day of classes. Be sure to have enough funds from another source to cover this period.
To apply for a private loan you must contact the lender. You can usually complete an application via their web-site or by phone. The lender will check credit, approve the loan, then request the Office of Financial Aid to certify the loan. Loan period and eligibility of amount borrowed are certified.
Suggested Lenders for Private/Alternative Loans
Borrowers have the right and ability to select the education loan provider of their choice and are not required to use any of the suggested lenders.
All information was accurate as of