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Alternative Loans

 Alternative or private loans are available to creditworthy borrowers to meet the cost of education after other sources of aid has been depleted or when federal loan limits have been reached.  Alternative student loans usually have higher interest rates than federal loans.  Please note that some lenders may cover additional educational expenses including previous college balances.

Before applying for an alternative student loan, a student should apply for financial aid, including the Federal Direct Student Loan.  If the student has applied for aid as a dependent student, his or her parent can apply for a Federal Direct Parents Loan for Undergraduate Students (PLUS).  Then, if the student needs additional funds, the student or parent can apply for a private alternative student loan in an amount up to the cost of attendance minus any other financial aid the student will receive for the loan period. 

Note: UMUC does not endorse any specific lender or group of lenders. The application for an alternative student loan is made directly through the lending institution.  As a part of this process, the Financial Aid Office must certify enrollment and other information for the student or parent borrower of an alternative student loan.

Many lenders have alternative student loan options. Check with your bank or lending institution, or search the Internet for "Alternative Student Loan" to find information on participating lenders, application requirements, interest rates, loan limits, and repayment options.   

For more information, please view the Private Student Loans brochure.

Questions to Ask Your Student Loan Lender

As with all borrowing, students and parents must carefully consider the terms of an alternative student loan before borrowing.  Some of the questions they should ask an alternative student loan lender might include:

• How much may I borrow?
• What are the fees associated with the loan?
• What is the interest rate on the loan?
• How is the interest rate calculated?
• What are the terms of repayment?
• How much will my payments be if I borrow $x?
• Do I need a co-signer?