Alternative Education Loans
You should only consider borrowing an alternative education loan, sometimes referred to as private education loan, as a last resort. If you must borrow an alternative loan, be sure you borrow all of your available Federal Direct Stafford Loans first.
If your parent is willing to borrow the loan for you, consider the Federal Direct PLUS Loan. It may be a less expensive option and offers flexible repayment terms. The Federal Direct PLUS Loan comes directly from the federal government. Repayment begins once the loan is fully disbursed; although you can defer the principal payment (interest will continue to accrue) until the student is no longer enrolled at least half time.
Things to consider:
Alternative/Private loans are a source of funding meant to supplement (not replace) borrowing through federal student loans. For many students, federal loans are not enough to cover the cost of attendance. In this case, private student loans might be an appropriate option. Here are some tips on how to select and apply for the right private student loan:
Compare Private Student Loans - While federal loans are regulated to have the same rates and fees, private student loans come in different shapes and sizes. It's important to compare different private student loans and find the right fit for your needs.
Look at the APR - The Annual Percentage Rate (APR) on a loan takes in all the costs associated with the loan so that you can compare one loan to another on an apples-to-apples basis. Interest rate alone is not an adequate point for comparison. For example, a loan with a high interest rate might look worse than a loan with a lower interest rate, but high fees on the lower-rate loan mean that it might actually be more expensive. The APR would reflect this difference.
Compare total cost of loan, or “price” of loan - This takes repayment terms such as interest rates and timeline for repayment into consideration. Your need for $5,000 today may cost you considerably more if paid back over the course of 10 years. APR expresses a similar point of comparison, but it’s often useful (and sobering) to see how much a loan might cost you over time. Remember – loans with shorter repayment terms will usually cost less than those with longer repayment terms.
Apply with a cosigner – Most student borrowers will be required to apply with a credit-worthy cosigner.
Only borrow what you need - Do NOT borrow a penny more.
There are a number of alternative loan options available to students (with a credit-worthy cosigner). The following list includes some of the programs that exist and is not all inclusive. It is important to remember that lenders make changes on a regular basis and while we attempt to update our information as quickly as possible, you should discuss any terms or conditions with your lender.
Maine Private Education Loan Network
Seaboard Federal Credit Union
University Credit Union
Other Private Education Loans
Citi (CitiAssist Student Loan)
Citizens Bank (TruFit Student Loan)
Discover Student Loan (Certified Private Loan)
Maine Educational Loan Authority (The Maine Loan)
Sallie Mae (Smart Option Student Loan)
SunTrust (Custom Choice Loan)
Union Federal (Private Student Loan)
Wells Fargo (Collegiate Loan)
Comparing Alternative Loans
There are a number of websites that will assist in comparing alternative loans. When applying for a loan, be sure to ask lots of questions. Your school can also assist you with alternative loan information.