Private Alternative Loans

What are Private Alternative Loans:

Private alternative loans help bridge the gap between the cost of attendance and the amount of financial aid you receive. These are credit-based loans that are usually borrowed by the student and will most likely require a credit-worthy co-signer for the loan to be approved. Eligibility for private alternative loans depends on your credit score, your income and your debt as the financial institutions offering these loans review your ability to repay the loan.

Many lenders now offer a choice between a fixed-rate loan or a variable interest rate loan. Typically, the interest rates are based on either the Prime Lending Rate or the LIBOR index. Interest on private loans will accrue from the time a loan is disbursed to the university. Upon applying, your lender will provide you with necessary information regarding the terms and conditions of the loan.

First Consider Federal Loans:

Private loans usually cost more than education loans offered by the federal government because they may have higher interest rates, fees, and varying terms and conditions. Therefore, we strongly encourage our students to apply for financial aid first in order to maximize their federal student loan eligibility. Parents may also wish to review the Federal Direct Parent Loan (PLUS) information on our website, and instead consider borrowing from that federal loan program.

What to Know about Private Loans:

When reviewing private loan options, make sure you understand the terms and conditions of the loan for which you are applying. Lenders may offer more than one option for repayment. Some lenders may require you to make interest payments while you are in school, or may not require any repayment of the loan until after graduation. Keep in mind that if you select a private loan that allows you to defer the repayment until after you graduate, interest will still begin to accrue when the loan is disbursed to the school. You should note that capitalizing interest over 4 years of study will result in a higher balance due than if you paid the interest while in school.

If you need to borrow a private loan we remind you that the lender will perform a credit check on you and your co-signer, if applicable. In order to minimize the number of times your credit is checked, you should apply for a loan for the entire academic year rather than prior to each semester.

Students that are not meeting the Satisfactory Academic Progress (SAP) requirements of the University should first check their private loan lender’s SAP policy before applying for a loan. Some lenders require that students meet the SAP requirements of the University to be eligible for their loan program.

Where to find a Private Alternative Loan:

Due to the state of the economy, many lenders have stopped offering private alternative loans and those that are still offering have tightened their credit criteria. There are currently several major national banks that offer private alternative loans for education, as well as, some credit unions, a few state agencies, and a couple of other financial institutions. The University of New Haven does not recommend any particular lenders. We will accept and certify a loan from any lender the student chooses. Students can search online or consult with their established financial institution to find a private alternative loan that meets their needs.

We encourage students to research all their loan options before applying. It is important to note that all lenders can change their loans on a moment's notice. To find the best private alternative loan program for you and your family, we suggest you visit individual company websites for the most up-to-date interest rates, terms and conditions of the loan program they offer.

Applying for Private Loans:

Loan applications for most private alternative loans are completed online. It is the student's responsibility to follow-up with the lending institution to ensure that they have received all requested documents needed to finalize the loan. Once the lender has all required information from the student borrower and co-signer (if applicable), the lender notifies the school if the loan is approved. The Financial Aid Office adds approved loans to the student’s financial aid award and notifies the student.

The University of New Haven must have the approved private loan 10 days prior to the due date on the student’s tuition bill. Most private alternative loans are disbursed directly to the University and are credited to the student’s account. If you requested the loan for the full academic year, funds will be disbursed in two equal installments, fall and spring. Please note that the university does not receive the actual disbursement of the loan until after the first day of classes for the semester.

As part of the application process you will be required to provide the Self-Certification form to the lending institution you select for the processing of your loan. This form will be provided by your lender however the university is also required to provide you with a copy.