Private-Alternative Loans

Federal loans are generally the best options and should be your first consideration. Laws passed by Congress set federal loan interest rates and fees, and define clear terms and conditions for these type of loans.

However, private loans, also known as alternative loans, provide another borrowing option. Although the FASFA is not required, private loans may have varying interest rates and limited repayment options. You should consider alternative loans as a “last resort” lending option.

Salem College does not endorse, recommend, or promote any lender for private loans.

ELMSelect is an unbiased search tool for private student loans.

This listing is not a preferred lender list, nor does it represent every lender that provides private educational loans. Salem College will certify private education loan requests for any lender you choose, regardless if they appear on ELMSelect or not.

The lender you choose will provide you with current interest rates, processing fees, and co-signer requirements. The lender determines interest rates for loans based on the student and cosigner’s credit worthiness.

Do Your Research

Alternative student loans differ from lender to lender. It’s important to ask questions when seeking a private student loan, so you can compare loans, and choose the one that best fits your needs.

Here are a few questions you might want to ask a potential lender about any private student loan you are considering:

• Will I need a cosigner?
• What is the interest rate?
• Will I need to make payments while I am in school?
• Are there any fees?
• Is there a minimum or maximum amount I can borrow?
• Does the lender require Satisfactory Academic Progress?
• When does the lender capitalize accrued interest? (that is, add any unpaid interest to the principal loan balance, which increases the amount of money you have to pay back)
• Does the lender combine billing statements for federal and private student loans so I only have one monthly payment?
• Does the lender offer electronic payments?
• Can I use this loan to cover an unpaid balance from a previous school term?
• Does the lender offer interest rate reductions or other incentives to borrowers?

Other Frequently Asked Questions

What are the disadvantages of an alternative loan?

• Higher interest rates and fees than federal loan programs.
• You must have a satisfactory credit history and/or use a co-signer to be eligible for these loans.
• School-certified alternative loans are considered a source of financial aid and must be included in your financial aid award package. This may limit how much you can borrow.
• You cannot consolidate alternative loans with federal loans.

How much loan am I eligible to receive?
Your loan eligibility is based on your Cost of Attendance (COA) minus any other awarded financial aid. Salem College cannot certify your loan amount above your maximum eligibility.

Has my loan been approved?
Please be aware that “pre-approval” is not the same thing as a final approval because once the lender receives the school certification record the loan could still be denied by the lender. Please be sure to complete the application in full to avoid delays in the processing of your application.

Can I use my alternative loan to defer payment of my bill at Salem?
If the Financial Aid Office receives an approved school certification request from your lender, your alternative loan amount may defer (count as a credit) your bill.

What is the loan period as requested by the lender’s loan application? The loan period for:

• The academic year is August 2024 – May 2025.
• The fall semester is August 2024 – December 2024.
• The spring semester is January 2025 – May 2025.
• The summer semester is May 2025 – August 2026.

Alternative Loan Tips

• Never borrow money you do not absolutely need. Before you explore private student loans, be sure you exhaust your other funding options, and then you will understand how much money you need to borrow through an alternative loan.
• Be selective in the lender you choose – compare benefits.
• Budget for repayment.
• Be realistic about what your salary will be when you graduate from college.
• Add up the total amount you will owe on all your student loans.
• Estimate what your monthly payments will be.
• Compare your estimated monthly payment with your estimated monthly income.