Getting Alternative School Loans When You Already Have Federal Loans

Alternative school loans are loans that can help pay for higher education when federal loans aren't enough. If you currently have federal loan that doesn't cover the entire amount of your college expenses, you may want to consider an alternative student loan as well.

Is an Alternative Student Loan Right for Me?

You should only seek alternative school loans (also known as private or personal school loans) if you have exhausted all federal financial aid options, including grants, scholarships, Work-Study programs, and federal loans.  There are also private scholarships and grants that are worth exploring before adding additional debt to the picture.

Alternative School Loan Tips

  • Only borrow what you need. Never borrow money you don't need. While alternative school loans generally have better interest rates than conventional consumer or bank loans, their rates are still generally higher than federal loan rates.

  • Do your research! While federal loans are guaranteed by the government, alternative school loans are backed by student loan companies. Don't select the first lender you come upon. Research who can give you the best interest rate, best repayment plan, and lowest fees.

  • Establish credit. Federal loans are based primarily on need, while alternative school loans generally depend on your credit score. If you have yet to establish credit, you can get a cosigner (such as a parent) to put their name on the loan in case you fail to make payments. The better the cosigner's credit, the better your alternative school loan's interest rate.

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