Student Financial Aid

Alternative Loans

 

What are alternative loans?

Alternative Student Loans are credit-based student loans offered by alternative lenders.  Alternative loans are not based on need, but on the applicant’s creditworthiness.  Alternative loans should be considered as a last resort since they typically have higher interest rates and less favorable repayment terms than government-backed student loans.

A Student may want to consider an alternative loan if:

Things to remember before applying for an alternative loan:

When choosing a lender, consider the following:

Interest Rate:

What is the formula used by the lender to calculate interest and how often is interest capitalized (added to the principal balance of the loan)?  For instance, a lender might use the Prime Rate +1% as its formula, they may adjust the rate and capitalize each quarter.  Other lenders might use the LIBOR as the index. 

Fees:

Does the lender charge fees and, if so, what percentage of the loan does the fee comprise?  Some lenders may have a fee scale depending on the borrower’s credit worthiness.

Loan Amount:

Does the lender place an annual or aggregate cap on the amount the student can borrow?

Other eligibility requirements:

Does the lender require that the student be enrolled at least half time or will loans be made to students who are taking a lighter load?  Does the lender require that the student be in a degree program or will it lend to students taking courses for other purposes (personal and/or career development) that do not lead to a degree program?

Below is a list of lenders who continue to participate in the Alternative Student Loan Program and from which UMSL students have received alternative loans in the past 3 years. You may choose any educational loan lender you prefer, including lenders not on this list. 

Here is a List of Lenders that can provide alternative loans.