Alternative (Private) Education Loan Guide
UMD encourages all students to complete the FAFSA and apply for financial aid through federal and state programs before applying for an alternative loan. Loans offered by the federal aid programs do not require students to have a good credit history or a cosigner and may have more favorable interest rates.
Because each borrower's needs are unique, UMD cannot recommend a loan program for you. If you are considering an alternative loan, you should carefully evaluate each loan program before applying to determine which is best for your educational needs.
You are free to borrow from the alternative loan program of your choice; however, if you have borrowed from one program in the past, it is suggested that you continue to use the same loan program each year, if possible, as long as you are satisfied with the lender, their terms, and their service. This will make repayment easier, as you cannot consolidate alternative loans with federal loans, and you may not be able to consolidate different types of alternative loans.
WHAT TO KNOW BEFORE APPLYING
WHAT TO KNOW BEFORE APPLYING
Rates are competitive between most lenders.
Interest rates are variable over the life of the loan, determined
quarterly by each lender, and are not capped.
Lenders base their rate on either the Prime Lending or the
LIBOR rate, plus percentage points. Most lenders have tiered interest rates – the interest
rate for your loan will depend on your or your cosigner’s
credit rating.
The interest on private loans is not subsidized by the U.S.
Department of Education, or any other agency.
Interest on these loans begins to accrue when the loan is
disbursed.
Some lenders may require you to make interest payments while
in school, while other lenders may allow you to defer interest
payments while you are still in school. Interest charges will
still accrue if you choose to defer your interest payments.
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Some lenders require you to apply with a cosigner, regardless
of your income or credit rating. Check your loan program for
these requirements.
International students can apply for most types of alternative
loans but must apply with a cosigner that is a U.S. citizen
or a permanent resident of the United States.
Most students will receive a lower interest rate if they apply
with a credit-worthy cosigner.
Students without sufficient personal income or a credit history
typically need to apply with a cosigner.
Some lenders will release the cosigner once the student is
in repayment and has made 48 consecutive on-time payments. Check
each loan program for specific requirements regarding cosigner
release.
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Students that do not owe a tuition balance cannot borrow after
the last date of enrollment or after they have withdrawn
from classes.
If UMD receives your loan application after your
last date of enrollment, your borrowing options are limited
to the amount you owe in tuition and fees as of the date your
lender requests school certification of your loan application.
If the amount you owe in tuition and fees is less than the lender's
minimum loan amount, your loan will be certified for the lender's
minimum loan amount.
The AFG, KEY and the SELF programs do
not allow students to borrow for an enrollment/loan
period that has ended, or after a student has withdrawn.
The Signature Loan program allows eligible
students to borrow up to 60 days after the enrollment/loan
period has ended if they do not apply with a co-signer. Students applying with a co-signer may borrow up to 12 months after the loan period has ended.
The US Bank Gap and US Bank No Fee Loan programs
allow students to borrow up to 180 days after enrollment/loan
period has ended.
The Wells Fargo Collegiate Loan program allows
students to borrow up to 7 months after the enrollment/loan
period has ended.
The CitiAssist Loan program allows students
to borrow up to 12 months after the enrollment/loan period
has ended.
IMPORTANT NOTE ABOUT DEADLINES: You must apply,
have your application approved by the lender, certified by the
school and disbursed within the lender’s deadline. No
exceptions can be made.
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Alternative loans cannot be consolidated with Federal Subsidized/Unsubsidized
or Federal Perkins loans for repayment.
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Alternative loans are not guaranteed the way federal loans
are. In the event of your disability or death, the lender may
still require repayment of your loan.
Repayment terms, grace periods, deferment and forbearance
options vary by loan program and are determined by the lender.
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If you file a FAFSA to apply for traditional financial aid each
year:
Apply for alternative loans after you receive and respond to
your financial aid award notice from UMD. UMD will not be able
to determine your alternative loan eligibility until you have
responded to your aid offer.
If you will not complete a FAFSA:
For fall semester, apply after July 15th.
For spring semester, apply after November 15.
For May Session and/or the Summer term, apply after you finish
registering for these terms.
Study Abroad students should not apply until after they have filed
all necessary study abroad paperwork with the International Education
Office.
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Apply online
through the UMD website or by phone directly with your lender
of choice.
When applying, make sure you are applying for the lender’s
alternative loan program. Some lenders refer to alternative loans
as “private” or “supplemental” education
loans.
Do not apply for a Federal Stafford Loan – this is a sister
program to the Federal Direct Loan Program used at UMD. UMD students
cannot borrow from the Federal Stafford Loan program because they
are borrowing from the Federal Direct Loan Program.
Indicate the University of Minnesota Duluth as the school you
will attend when you apply. Our federal school code is 002388.
Do not apply to more than one loan program at the same time unless
you qualify for and intend to borrow the total
amount you apply for.
If you apply to more than one loan program, the University will
process your loan applications in the order they are received for
school certification until you run out of eligibility.
If you are planning to attend both fall and spring semesters,
apply for the total amount you need for both semesters
and use the month of September as the loan period start date and
the month of May as the loan period end date.
Example: To borrow $2000 for each semester of the 2006-07 academic
year, apply for a $4000 loan with a loan period of 09/2006 to 05/2007.
Follow your lender’s application instructions for completing
the application process. In most cases, the lender will pre-approve
your application online or by phone, then mail you a paper loan
application or have you print your online application for your completion
and signature.
Complete and return your application directly to the lender.
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Once your lender fully approves your application (usually after
they have received your signed application) they will notify UMD
that your loan is ready for school certification.
UMD will certify your loan eligibility based on the cost of attendance for the loan period, other aid you will receive, and the amount
you requested. We request disbursement dates to correspond with
the start dates for your enrollment/loan period.
The Office of Financial Aid and Registrar will send you a revised
eFAAN when we certify your loan to the lender.
Your lender will electronically forward your loan disbursements
to UMD on the date(s) requested.
UMD will electronically transfer your loan disbursement to your
tuition account with Student Accounts Receivable. Funds will first
be credited toward any outstanding tuition and fees.
If you are entitled to funds in excess of your tuition bill, Student
Accounts Receivable will issue you a surplus check or direct deposit
the excess funds to your designated account.
Some lenders disburse paper loan checks, payable to the borrower
and UMD. If this is the case with your lender, UMD will notify you
via your University e-mail account when it is ready for disbursement and you will then need to claim your funds at the Student Assistance Center.
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Alternative Education (Private) Loans
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