Private Alternative Student Loans Examined
What the Loan Covers
The private alternative student loan covers college expenses that tuition will not: off campus housing, school supplies, transportation, computer expenses, and so on. It is best to research the various private alternative student loan options in order to secure the best rate. Many times this loan will have a lower interest rate, but require higher fees. A good rule of thumb is that 3% to 4% in fees will be equivalent to a 1% higher interest rate.
Loan Interest Rates
In general, the private alternative student loan will have interest rates of the London Interbank Offered Rate (LIBOR) + 2% or PRIME - 0.50% with no fees. In order to qualify for these rates, the borrower will need to have good credit as well as a credit-worthy cosigner. If a lender requires school certification, then they may cap the annual loan amount at the cost of education less aid received (COA-Aid).
