• Alternative Loans


  • These types of loans are available to students who have unusually high costs, or who are not eligible for traditional financial aid (ex: not meeting satisfactory academic progress standards to receive Title IV aid). Most have a few simple eligibility guidelines for creditworthy individuals. Some will allow you to get a co-signer if your credit is not perfect or non-existent. Most have fees, either “up-front” fees or “back-end” fees. Interest rates are usually lower with a good credit rating. Some require payments while you are attending school and some do not. It is best to shop around rather than just calling one lender. We recommend that you apply for financial aid and finish the process to see what aid you are eligible for before applying for alternative loans. Please contact your financial aid office if you inadvertently receive a check from an alternative loan lender. Perhaps you were eligible for a lower cost Stafford loan and weren’t aware of it and/or had budget adjustments that the financial aid office was unaware of.

    Recently, many people across the country have been receiving unsolicited mail and email and seeing popup internet ads from alternative loan lenders. Because the cost of tuition and books have risen so quickly, students and the federal financial aid system have been unprepared for the added needs of students to meet these increased costs. Lenders, some of whom are regular banks and others the public may have never heard of before, are sending out advertising letters for loans of upwards of $40-50,000. Mt. Hood Community College views these loan opportunities as dangerous or inappropriate for first time borrowers, highly motivated students desperate to go to college or those with large consumer debt that they want to roll into an educational loan. We ask that students or parents educate themselves about private loans, their higher interest rates and terms or conditions. Ask questions of these lenders and research many different companies before committing to a loan with them. Adding an alternative loan to other aid received through the federal aid system amounts to indebting yourself for non-educational costs or consumer debt consolidation. Alternative loans are intended to meet extraordinary educational costs brought on by fast rising tuition and book costs and high private school tuition.

    ***Communication is key.***Alternative loans are different from most other types of financial aid in that you need to be in close contact with the lender rather than the school to ensure your loan is processed in a timely matter.

    Processing deadlines: Due to lender policies regarding credit checks and other factors, there are processing deadlines that you need to make sure you’re aware of. Contact your lender for details.

    Loan amounts: Be aware that your requested loan amount may be adjusted by any co-signers that are tied to your alternative loan. Discuss the loan with your co-signer to make sure you’ve agreed upon the amount you may borrow.