Single Mom School Loans

All About Alternative College Loans-How To Choose Wisely To Avoid Costly Debts

Shopping for alternative college loans should be taken seriously. You should always be on your guard, and weigh the pros and cons of each loan program you encounter. It’s important that you take your time, talk to the right people, and reflect whether alternative college loans are really the right solutions for you.

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With the skyrocketing costs of education, it only makes sense that you get school loans that won’t put you into so much financial burden. The most likely solutions would normally come in the form of scholarships, grants, and federal student loans. Federal loans are not only affordable, but the government could also cancel them if you qualify.



Alternative college loans, also popularly referred as private student loans, are generally offered by non-government lenders, such as banks and private lending institutions. Popular sources are Citibank, the U.S. Bank, Wells Fargo, and Sallie Mae. Private companies advertise their products and services through online advertising, direct mail marketing, television, and radio. In order to qualify and get lower loan rates, a borrower must meet or exceed the credit, employment, income, down payment, and collateral requirements of a private loan provider. Since most college students have insufficient credit history and don’t have any collateral, a cosigner is almost always needed when applying.

A cosigner is basically legally responsible for the entire loan, including paying for it when the principal borrower defaults his/her payments. It is a serious obligation. That’s the reason why most are advised to co-sign only for their trusted relatives or children to help them build a good credit history.

Private student loan rates are adjustable. They change either monthly or quarterly in correspond to their index (LIBOR or Prime). The adjustable rates are calculated and shared with the borrower in the form of an APR, which shows the full cost of using money during a specified period. Citibank, for instance, offers 3.625%-11.375% rates for their graduate and undergraduate loans. Scams are very real. So, beware. Don’t be fooled by some deceptive lenders who use government badges to lure unsuspecting borrowers. But perhaps, the biggest scam is the unforgiving system employed by some companies, like Sallie Mae. For this reason, Sallie Mae became the main subject of a 2006 report on 60 Minutes.

Private loans are expensive. If you don’t choose or handle them well, they could spiral out of control. You should always be mentally and emotionally ready before taking out one of these. You really don’t have to avoid private student loans altogether. You just have to be more discriminating and responsible, including paying on time to avoid compounding interests.



Choose a lender with integrity and is committed to giving their borrowers excellent customer service and benefits. They do not really come in great numbers. So, before you contact any provider of alternative college loans, check out any complaints or existing reviews about them on the internet.