Alternative Student Loan
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Bridge the Gap with an Alternative Student Loan
We recently received an email from a worried parent who felt that she would be letting her son down as she and her husband could not afford their Expected Family Contribution to his first year of college. We enlightened her by introducing her to an alternative student loan.
I've being reading your website avidly but just can't seem to find the answer to my particular problem. My son has been offered a place at university but the financial contribution that we are expected to make is so high. I think I am just going to have to tell him that the financial aid he was awarded just isn't enough. Is there any other way that we can fund our EFC other than our income and miniscule savings?
Thanks so much
Thank you so much for your email. We are delighted that we can be of help! Just because the government has decided that you have to make a contribution to your son's education, you do not have to pay this all in one lump sum. There are a variety of federal loans available, but at this present time we would like to draw your attention to an alternative student loan that has become increasingly popular in the last few years.
An alternative student loan, otherwise known as a private loan is simply an alternative source of funding than a federal loan. It is supplied privately, by lenders and can be used to “fill that gap” between federal financial aid and the Cost of Attendance (COA).
The alternative student loan market has become increasingly popular, with over $10.6 billion dollars being loaned in the 2003-2004 academic year. As a result the lenders have become fiercely competitive, which can only help you, as interest rates on the loans are generally set at prime rate + 0%! This makes an alternative student loan cheaper than many other sources of private funding available. Also, another added benefit is that repayment of the loan can be deferred until after your son graduates. By that time you may be able to get him to make the repayments himself!
We just want to remind you that you should check that the lender you choose is an accredited lender for an alternative student loan. Compare their interest rates and associated fees with other such lenders before applying. This last thing you want is to end up with a loan that you are unable to repay and a bad credit history.
This is a time to be proud of your son's achievement in being offered a place and an alternative student loan will finance your EFC.