Students and families are bombarded by advertisements and mailings about private student loans. The Alma College Student Financial Assistance Office reminds students and families to beware of high interest loan products and deceptive marketing tactics. It is almost always in the best interest of students to explore federal student loan options before applying for private loan products.
As a general rule, students should only consider obtaining a private education loan if they have maxed out the Federal Stafford Loan. They should also file the Free Application for Federal Student Aid (FAFSA), which may qualify them for grants, work-study and other forms of student aid. Undergraduate students should also compare costs with the Federal PLUS Loan, as the PLUS loan is usually much less expensive.
Federal Stafford Loans
Stafford Loans are available to all students who file the Free Application for Federal Student Aid (FAFSA) who are enrolled at least half-time. The maximum Stafford Loan amount for which the student is eligible is reflected on the financial aid award letter. In some cases, part or all of the loan will be classified as "unsubsidized," meaning the student, rather than the government, is responsible for the interest while enrolled in school. The interest rate is 6.8%.
Click here for answers to frequently asked questions and here to fill out your Stafford Loan Master Promissory Note.
The Federal PLUS (Parent) Loan
Click this link above to learn more about the PLUS loan and apply for the loan online.
Alternative Education Loans
Alternative Education Loans help bridge the gap between the actual cost of your education and the limited amount the government allows you to borrow in its programs. Private loans are offered by private lenders and there are no federal forms to complete. Eligibility for private student loans often depends on students and parent’s credit scores
Some families turn to private education loans when the federal loans don't provide enough money or when they need more flexible repayment options. For example, a parent might want to defer repayment until the student graduates, an option that is not available on all government parent loan programs. Many PLUS loan providers are starting to allow parents to defer payments on the PLUS loan while the student is in school using an administrative forbearance (interest continues to accrue).
If you have questions about any of the federal or alternative loan programs, please call 1-800-321-ALMA.
