Alternative Private Loan: What is it?
Private Student Loan
Alternative Loans are private educational loans that are available to students in need of additional financial assistance after all other types of funding have been exhausted. You, the student, will be the borrower of the Alternative Loan; however, you may need a credit-worthy individual to act as a co-signer. Some alternative loans may require interest payments while the student is enrolled in school.
Before applying for a private alternative education loan, you may qualify for grants and/or other assistance under Title IV of the Higher Education Act. Loans under Title IV include the Direct Stafford Loan and the Direct PLUS loan. These Title IV loans may have terms and conditions that are more favorable than the terms and conditions of private alternative loans. The more favorable terms of Federal loans generally include the interest rate, fees and repayment options such as deferments and forbearances. In addition, Federal loans may be eligible for loan repayment, loan forgiveness, discharges due - for example - to total and permanent disability or death.
All students are strongly encouraged to complete the FAFSA (Free Application for Federal Student Aid) each year. By completing the FAFSA you are applying for federal and state aid including Pell grants, Direct Stafford Loans, and other federally funded campus need and/or merit based aid. Parents of dependent students may also apply for the Direct PLUS loan.
Who can apply?
Students, with a creditworthy individual, can borrow additional loan funds to help meet their college costs using Alternative Loan programs. These loan programs are provided by commercial lenders and are not supported by state and federal funds.
How much can you borrow?
The annual limit is the undergraduate cost of attendance minus all other financial aid, including loans.
How do I apply?
Follow this link to be guided through the maze of private alternative education loans to help you determine what options are best for you.
Students and their families may choose Alternative Loan Lenders other than those listed at the link above. If you choose such a lender, you should complete an application with the lender. The lender should then forward a certification request to the Office of Financial Aid by mail, fax or email.
Your choice of a lender, other than those listed at the link below, will not result in the denial or a delay of processing.
Private Alternative Loan Considerations
- Apply with a credit-worthy cosigner. Applying with a cosigner may provide you with an increased chance of approval and more competitive interest rate.
- Borrow only what you need to meet your educational costs.
- Do your research. Ask questions of your lender and find out which loan will benefit you the most.
- Be aware of interest rates, fees, and repayment terms before completing the application and promissory note.
- Monitor your total indebtedness. Make sure you will be able to repay the amount with interest.
- Cosigners are equally responsible for repayment of the loan and their credit is equally affected.
Alternative Lender Information and Links
You have the right to select the alternative lender of your choice. The list of lenders provided are lenders used by University of Pittsburgh students. Neither the University of Pittsburgh nor the Office of Financial Aid intends any specific endorsement, recommendation, or promotion of these products by including lenders on this list. An alternative loan is an agreement between the borrower, cosigner and the lender. The University of Pittsburgh cannot be held liable if the borrower is dissatisfied with interest rates, other terms and/or services provided by the lender.
Students who decide to borrow private alternative loans must complete a Self-Certification form. Your lender will provide you with the Self-Certification form, including instructions for completion. The Self-Certification form should be returned to the lender from whom you are borrowing.
Students will be asked to provide the Cost of Attendance, which includes tuition, fees, housing and meal plan on the Self-Certification form. We recommend you budget around $3,296 for books, transportation and miscellaneous expenses.
To complete the financial aid section of the Self Certification, students can view their financial aid information by logging on to my.pitt.edu and searching for Student Center. Click on "View Financial Aid" and on the appropriate financial aid year. Details of the total financial aid awarded to the student can be seen.
Disbursement of Private Alternative Loan Funds
Per the Higher Education Opportunity Act (HEOA) regulations, lenders are required to provide borrowers with a three business day right-to-cancel period after the final disclosure of a private alternative loan. In addition, lenders are required to add an additional three business days for a borrower to receive the final disclosure. In most cases the disbursement process, which in itself may be another three day process, will begin on the eight day. Borrowers should keep this timeline in mind if they are planning to use loan proceeds for other educational purposes.
If you are denied
If you are denied, you and your cosigner can contact the lender and request an Adverse Action Credit Letter to determine why. You should also request a copy of your credit report to review your credit information.