Alternative student loans are unsecured non-federal education loans from private commercial lending institutions for creditworthy borrowers. Alternative student loans usually have higher interest rates than federal loans. However, the interest rates on these loans can be lower than conventional credit products such as personal loans and credit cards.
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.
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?
Application for an alternative student loan is made directly through the lending institution. Usually, 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 Web for "Alternative Student Loan" to find information on participating lenders, application requirements, interest rates, loan limits, and repayment options.
Reminder: Students applying for alternative loans must complete a Private Education Loan Applicant Self-Certification Form provided by the lender or available for printing from the "Forms and Pulications" section of this Web site.
Estimated financial assistance for the period of enrollment covered by the loan (if you have applied for aid you may find this information at
Towson Online Services:
Difference between amounts the cost and your estimated aid
Towson University does not provide alternative student loans or endorse any specific lender or group of lenders.