Private (Alternative) Loans
Private (Alternative) Loan programs are educational loans that are available through private lending institutions. They are not part of the federal government loan program. Alternative loans are intended to supplement traditional financial aid programs. Loan terms, interest rates and fees vary by lender. These loans require a student to be credit-worthy or have a credit-worthy co-signer. Students are encouraged to research various alternative loan options and select the loan program that best fits their circumstances. Students must request an application directly from the lender, although most lenders will allow you to apply online.
UTSA Student Financial Aid and Enrollment Services strongly encourages you to apply for federal aid by completing the Free Application for Federal Student Aid (FAFSA)
(http://fafsa.ed.gov ). You should consider your options for Federal and State financial aid programs before applying for an alternative loan. Federal student loans usually provide better interest rates/terms and greater flexibility in repayment options compared to alternative loans.
UTSA does not recommend any specific lenders for alternative loans. You are free to select any lender offering private (alternative) loans. We recommend you compare loans from several lenders to find the best interest rate/terms and repayment options for your situation.
Below is a link to Student Lending Analytics, an independent research and advisory firm that has no affiliations with any student lenders. It may serve as a starting point in your alternative loan search.
Important Changes Effective February 14, 2010
Students that pursue Private Education Loans (also known as Alternative loans) through a lending institution will be subject to new Federal guidelines. The new guidelines will require that lending institutions provide 3 additional disclosures to the borrower regarding their loan application, approval, and acceptance status. The purposes of these disclosures are to:
- Present the terms, conditions and costs of the loan
- Allow for comparisons between lending institutions and promote informed borrowing
- Present lower cost federal options that may be available through the Free Application for Federal Student Aid (FAFSA)
How These Changes will affect school Certification and Disbursement
- Borrowers may notice longer processing times for our office to certify their alternative loan application. The reason for this increase in processing time is that with the approval of the loan the lender is required to give the borrower 30 days to accept the terms and conditions of the loan outlined in the approval disclosure.
- Students will be required to submit a Private Education Loan Applicant Self-Certification form to their lender. No funds will be disbursed until this form is returned to the lender. This form can be obtained from your lender. Information regarding the total cost of attendance at UTSA can be found at http://www.utsa.edu/financialaid/cost.html.
- There will be an increase in the turnaround time for disbursement to allow for a ‘Right to Cancel' period. The Right to Cancel' period, which is found on the Final Disclosure form, gives the borrower a deadline to notify the lender that they would like to cancel their loan application. No loan funds can be released to our school until after this date has passed.
Due to these new regulations if you have specific questions regarding your alternative loan disbursement, please contact your lender first to verify that your loan application file is complete.
Click on the links below for Alternative Loan Frequently Asked Questions:
Who can apply?
What are the requirements to receive an alternative loan?
How do I complete an alternative loan application?
How does the alternative loan affect my financial aid?
What is the interest rate/origination fee for an alternative loan?
What is the alternative loan repayment period?
What is the processing time on certifying an Alternative Loan?
What type of information will the lender review to determine my credit worthiness?
What is credit history?
What is a FICO score and who uses it?
What should I do if I don't have a strong credit score?
Any student who is currently enrolled at UTSA for the term they are requesting the funds for.
- Some lenders require that a student needs to be at least half-time per semester and for others the minimum requirement needs to be enrolled for three credit hours.
- Some lenders require the student to be pursuing a degree.
- Some lenders require that a student needs to be making Satisfactory Academic Progress (SAP) during the semester.
- It is the students responsibility to make sure they know what criteria pertains to the loan.
You must choose the lender you want to use to pursue the alternative loan and complete the alternative loan approval and application process.
Once your lender of choice has received all the required documentation and approved your loan, they will notify the UTSA Financial Aid & Enrollment Services office by sending a pending school certification online, fax, or by mail.
Some lenders are not set up to notify schools electronically will send the pending certification form directly to the student. Students will be required to submit the paperwork to Financial Aid & Enrollment Services with the proper address and phone number of the lender attached.
Students can generally borrow the difference between the university's cost of attendance minus the students other financial assistance.
Filing the FAFSA is not a prerequisite for borrowing an Alternative Loan, but students are encouraged to complete a FAFSA, so they can be considered for the maximum aid they may be eligible for.
Loan terms, interest rates, and fees vary per lender.
All information about repayment will be discussed by your lender of choice when you begin the process of pursuing an Alternative Loan.
Once UTSA receives the pending school certification from your lender there is a 4-6 week processing time for all Alternative Loans.
- Any holds or issues affecting your financial aid will delay the processing of your loan.
- Any pending certifications that are incomplete will delay the processing of your loan.
- Students pursuing an Alternative Loan with no FAFSA on file will be delayed an additional 4 weeks on top of our regular processing time of 4- 6 weeks.
Lenders will review your credit history in order to determine if you are likely to repay your debt. They look at your payment history, amounts owed, length of credit history, any new credit you have applied for, and types of credit used.
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It is a record of how you repay your debts. Information from your credit history is gathered and kept in a credit report. The information in your credit report is compiled and given a credit score. The most common credit score used by lenders is the FICO (Fair Issac Corporation) score. You are entitled to one free copy of your credit report per year at www.annualcreditreport.com. Although they charge you a fee you can also receive your credit reports from each of three major credit bureaus: www.equifax.com, www.experian.com, www.transunion.com. Also for a fee you can get a copy at www.myfico.com.
A numerical FICO score is assigned to your debt obligations based on how you repay. FICO scores can range from 300-850. A Higher FICO score means a lender is more than likely to approve your loan application, because you have demonstrated responsible and on-time repayment habits for your debts. An average FICO score is 678. The FICO score is used by all three major credit bureaus that provide credit reports: Equifax, Experian, and TransUnion. It is a good idea to review your credit report before you apply for credit or a loan. If you have a credit score that is at or below the average FICO score of 678 then a lender may consider you high risk, and could deny your application. As mentioned earlier too many credit inquiries can lower your credit score. On average a credit score is lowered about 5-7 points per inquiry. By reviewing your credit report first it can help prevent damaging your credit score further.
Apply with a co-borrower that has a strong credit score. This increases the likelihood that your loan application will be approved.
Repaying your Loans
- Responsible Borrowing
- Steps for Successful Loan Repayment
- Stafford Loan Repayment Plans
- Repayment Calculator
- Loan Consolidation
- PLUS and Private Loan Repayment
- Trouble Making Payments
Avoiding Federal Loan Default
- Avoiding Federal Loan Default
- Consequences of Default
- How to get out of Default
- Trouble making payments
- Default FAQs
Loan Helpful Links