of the ARTS 2009/2010
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. It is very likely that they will require a co-signer. Many times a co-signer can significantly 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, Federal loans
Each lender has their own rate structure. You must contact each lender individually. You should 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
Most private lenders allow borrowers to begin repayment after graduation. Although the interest will be accruing, the principle of the loan is deferred. Ask about quarterly interest only payments to keep the total cost of your loan lower. 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 other types of 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, including funds to cover your expenses during winter break as you will not receive the 2nd disbursement of your funds until early January.
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, 2009/2010 by ELM Resources (coming soon)
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