University of Vermont

Student Financial Services

Private/Alternative Student Loans

UVM strongly recommends that students and families exhaust all other sources of funding, including federal student and parent loans before borrowing private/alternative loans. Federal student and parent loans carry benefits including deferment and cancellation clauses which may not be available on private/alternative student loans. Be sure to complete the FAFSA (Free Application for Federal Student Aid) to apply for federal student aid first. Complete the FAFSA online at www.fafsa.gov. Federal loans typically carry lower fixed interest rates and offer more flexible repayment options.

Researching Alternative Loan Lender Options

We encourage students to carefully research and compare private loan options before borrowing. Please keep the following in mind while researching your options.

  • Terms and conditions vary widely among lenders.
  • Consider contacting lenders or other financial institutions (such as banks, credit unions, or higher education authorities) with whom you already have a working relationship.
  • Student Lending Analytics, an independent research and advisory firm has compiled information on private student loans offered by several lending agencies. Visit their website for lender and loan comparisons. They also have links to various state agencies that offer alternative student loan options.
  • Many states have a higher education agency that offers financial assistance (grants and/or loans), and/or offers services to assist students in finding and comparing private student loans. Find contact information (including websites) for state higher education agencies here.

Questions to Ask When Shopping For an Alternative Loan

It's important to ask questions and compare lenders to make the choice that's best for you.

  • What is the interest rate and is it fixed or variable?
  • What is the maximum interest rate?
  • If the interest rate is variable, how often will it change and how high could it go?
  • When is accrued interest capitalized (added to principal balance)?
  • Is a co-signer required? Will having a co-signer lower my interest rate?
  • Is there any application, origination, disbursement or repayment fees?
  • What will the minimum payment be?
  • How long will I have to repay the loan? Are there any prepayment penalties?
  • Are payments required while I am in school?
  • What options are available if I can't make my payments due to a job loss or economic hardship?

Last modified February 01 2012 02:26 PM

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