Private Alternative Educational Loans
Under these programs, students may borrow up to the cost of attendance (as determined by the Financial Aid Office) less other aid received. These loans are non-federal loan programs that require at least half-time enrollment (minimum of 3 units/quarter at Pacifica), a good credit history, the ability to repay the loan, and US citizenship or permanent resident status. Some loans may require a credit worthy US citizen or permanent resident co-signer. Please note that students are encouraged to review their eligibility for federal student loans before pursuing private education loans as the terms and conditions may be more favorable. For details on federal student loans and their provisions, please visit http://studentaid.ed.gov. It is important that you make an informed decision regarding the lender and loan program you select.
On February 14, 2010, new Truth in Lending Act (TILA) disclosure requirements on private education loans took effect.US Department of Education regulations on private education loans require that:
- the lender present full disclosure of the terms and conditions of the loan (including fees, interest rates, repayment amounts) and
- the school certify a student's cost of attendance and eligibility prior to the lender disbursing funds and
- the lender obtains written confirmation through a signed self-certification from the borrower that s/he understands the terms and conditions prior to releasing loan funds to the school.
This new process may extend the processing time for private loans and may delay the release of loan funds to the school. Please allow a minimum of two to three weeks for processing of private alternative loans.
You will be required to complete the following disclosure form before a lender will disburse a private loan: Truth in Lending Disclosure (pdf).
Common Elements of the Alternative Loan that you should consider:
- Students must be enrolled at least half time
- Creditworthy (good credit history) or credit ready (no credit history and adhere to cumulative debt limits)
- Sufficient monthly income to repay the loan
- Stable residence and employment history
- U.S. citizen or permanent resident
- Students generally have three repayment options
- Pay interest and principal while in school
- Pay interest-only while in school
- Defer principal and interest and have the interest capitalized, (added to your principal)
The minimum payment is $50 per month, but will be adjusted higher depending on amount borrowed. Repayment period is up to 15 – 25 years depending upon type of loan and the amount borrowed.
The interest rates are usually variable and may be based on the Prime rate +/- percentage points or a LIBOR rating +/- percentage points depending on the loan program and the lender.
The guarantee fee is often between 0% and 10%, depending on credit history and the availability of a co-applicant. In addition, some loans have an additional fee added to the principal balance when the loan goes into repayment.
If you would like to apply for a private alternative loan, log on to the FinAid website to find a lender with which you would like to work. Due to the current state of the lending industry and because Pacifica is a small private institution, it is important to note that some lenders may opt not to work with Pacifica students. For complete details of the terms and conditions of each alternative loan program contact the lender directly, or visit their web site.