How to Get an Alternative Student Loan
College is expensive. There’s the rising cost of tuition, the cost of living in a dorm or renting an apartment, food, books, lab fees, a computer and printer, travel to/from school on holidays and more. Those costs, on average, can add up to be between $15,213 for a 4-year public school and $35,6361 for a 4-year private school. You can generally find your school’s estimated cost of attendance on their website or by checking with your financial aid office. Once you have an approximate idea of how much college is going to cost, you’ll need to figure out how you are going to pay the bills.
Use Financial Aid before Applying for an Alternative Student Loan
You should work as hard as you can to obtain free money, like college scholarships, to finance your education. Fill out the FAFSA every year so that you can qualify for financial aid from the government and from your school. Check your award letter every spring to see how much financial aid you received, and how much money you still need. Remember to maximize your scholarships, grants, and federal student loan funds first before considering any other financing alternatives, like an alternative student loan.
Use an Alternative Student Loan to Fill the Gap
After you have maximized all of your financial aid options, including federal loans, and are still in need of money to pay for college tuition and other school expenses, consider using an alternative student loan. Alternative student loans can be used to pay for most college related expenses, such as food, college room and board, a computer and student travel. Generally, once your loan is approved the funds are sent to your school. Once the remaining balance on your school account is paid, your school will disburse the rest of the funds for your additional college expenses.
Unlike most federal loans, alternative student loans are credit-based and so they can be more difficult to secure for college students with little credit history or income. The vast majority of students, especially undergraduates, will need an alternative student loan co-signer in order to get approved.
Finding an Alternative Student Loan Co-signer
Finding a credit-worthy co-signer is perhaps the biggest challenge facing college students today. The recent economic crisis, job losses and the decline in real estate values have impacted not only the college savings, but also the credit scores of many college families. In order to get approved for an alternative student loan in today’s environment, you will need to find a co-signer with a good credit history. Here are some of the qualifications you might look for in an alternative student loan co-signer:
- A good credit history with more than 18 months of borrowing, charging and repayment with few or no late payments on their credit report
- No excessive delinquencies, judgments, accounts that have been charged off or bankruptcies that were pending, filed or discharged in the past two years
- No prior student loan defaults
- Be a U.S. citizen and 18 years or the age of majority in their state
- Verifiable income (the amount will vary by lender)
A co-signer can be anyone, such as a parent, relative or family friend, who is willing to share the responsibility of the loan with you. Sometimes, it can be hard to ask someone to take on debt, especially if it’s not your parents. Check out these additional resources:
101 Ways to Pay for College
Looking for creative ways to pay your college bills? We’ve put together 101 of them! If you are a college student or parent, 101 Ways to Pay for College will help you to reduce expenses, manage your college budget and earn extra cash.