Alternative Loans…… A Beacon of Hope for Your Students?
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Transcript of Alternative Loans…… A Beacon of Hope for Your Students?
Alternative Loans….A Beacon of Hope for Your Students?
•What Are Alternative Loans?•Why Borrow an Alternative
Loan?•Types of Alternative Loans•Debt Management Tactics
What are Alternative Loans?
• Alternative Loans are loans that are not federally backed or insured.
• Typically the lenders are taking the financial risk on these loans
How Lenders Minimize Risk with Alternative Loans
• Tiered pricing based on school information
• Use of Co-borrower
• Tiered pricing based on borrower (and co-borrower) credit record
Alternative Loans On the Rise
• In 2005-06, private loans represented 20% of all education borrowing - $17.3 Billion (An increase of 900% in inflation-adjusted terms from 1995-96 to 2005-06)
• Federal education loan programs totaled $68.6 Billion in 2005-06
Source:ACE Issue Brief titled “Who Borrows Private Loans?”
Aug 2007 – author Jacqueline E. King
Why Such an Increase• Alternative Locator• http://www.theeasystudentsloans.com/• Apply For A Student Loan
Avoid High Interest Credit Cards & Don't Pay A Cent Until Graduation.www.gmacbankfunding.com
• Easy Student LoanBorrow up to $45,000 a year to pay for your college expenses.moneyforcollege.suntrust.com
• Astrive Student LoansLearn Now Pay Later - No Payments Until 6 Months After Graduation.www.GetAstriveLoan.com
• Student Loan SolutionUp To $40K For College, Go To Your First Choice School, Apply Online.www.1.nationalcity.com
• Get a Student Loan FastApply in Minutes, Check Sent to You. No Payments Until Graduation.www.TuitionWiseLoans.com
• Student Loan SolutionBorrow Up To $40K Per Year Now With No Payments Until You Graduate.www.citizensstudentloan6.com
• Get Loan Online, Quick ApproveBad Credit Rating? Need A Loan? We Have The Top Sites Here.www.hatarka.com
• Get A Student Loan FastGet Your Check in About a Week. Don't Pay a Cent Until Graduation.www.ThinkStudentLoans.com
• Chase LoansLow rates, flexible student loan repayment options. We can help you get up to $40,000 per school year. Official Chase student loans Web site.www.collegeloansite.com
• College Planning GuideFree Keybank College Planning Guide Order Your Copy Online Today.Key.com/collegeguide
Why borrow an Alternative Loan?
• Span the gap between Cost of Attendance and Aid
• Additional costs for special programs, like Study Abroad
COST
Alternative Loan
Grants Scholarships
Federal Loans Work
Why Borrow an Alternative Loan?
• Student is not maintaining Satisfactory Academic Progress
• Student is not enrolled at least half-time
• Student may not be enrolled as a “regular” student
What type of loan is best?
The answer is the same as it is for all financial aid questions . . .
It depends!
What type of loan is best?
• All are not created equal– Commercial Paper– Libor– T Bill– Minimum credit score requirement – Credit of borrower
School Certified Loans
• Can control the amount of loan a student borrows (Cost minus other aid)
• Record of alternative loans used by your students
• More accurate information if you are engaged in debt management counseling.
Loans NOT Certified by School
• It’s between the lender and the borrower
• No opportunity for school to conduct debt management counseling
Loans NOT Certified by School
• Consumer determines which loan to use, so he/she is not limited by school recommendation
• Flexibility in disbursement, etc.• Amount is not tied to cost of attendance
PLUS Alternative
• Parent debt• Fixed interest rate• No FAFSA required
(at some schools)• Additional Unsub
available if PLUS is denied
• Student debt (but parent might be co-borrower)
• Variable interest rate
• No FAFSA
GPLUS Alternatives
• Security• Benefits• Possible
consolidation• In-school
deferment • Repayment options
• Flexibility• Greater amount• Deal with lender
only• No FAFSAA
Selecting an Alternative Loan Lender
Should the student use his Stafford lender?
YesCombined bill?Less likely to default?
NoPerhaps not as flexible a program?Perhaps won’t be the best deal?