Because private loans are not guaranteed by the federal government, they are frequently more expensive than the federal and parent loans. If you have questions, contact the Financial Aid Office. Be a careful consumer. For many private loans, the interest rate or fees depend on the borrower’s or the borrower’s cosigner’s credit rating. For most students, an alternative loan is an option only if they have a loan cosigner with a good credit history.
Most alternative education loan programs offer loans at not one, but several interest rate tiers, and a borrower qualifies for one or another based on his and/or his cosigner’s credit score. Find out what interest rate (for example, PRIME plus 1%, LIBOR plus 0.5%) you qualify for before you finalize an alternative loan—it may be VERY different from rate you expect. Remember also: alternative loans typically have a variable, not a fixed interest rate. Before your loan can be approved by the lender, you will have to complete a Private Education Loan Applicant Self Certification. If you need help completing this form, please contact our Financial Aid Office.
You may use any lender, but do research, choose carefully, and don’t assume you will qualify for the advertised interest rate. Don’t borrow any more than you truly need. These loans are an expensive option.
A helpful website for borrower information on alternative loan programs is FinAid! The Smart Student Guide to Financial Aid.
Basic Loan Information
- Interest rate. Interest rates for alternative loans is often variable, commonly based on an index like LIBOR or PRIME, plus some percentage.
- Loan fees. Fees vary depending on the lender, the borrower’s repayment schedule, and the borrower’s or cosigner’s credit history.
- Disbursement. Funds are usually sent directly to Bennington College, at the beginning of each term.
- Interest accrual. The borrower is responsible for interest from the date of disbursement, although some loans permit borrowers to defer payments until they leave school or graduate. Loans will be less expensive if some interest payments are made while in school.
- Repayment. Depending on the lender’s terms, repayment may begin immediately after disbursement or may be deferred until the borrower is out of school.
- Length of repayment. Repayment schedules vary but, in some cases, the borrower may choose a repayment term of up to 25 years. Longer repayment schedules may permit smaller monthly payments, but the total amount paid on the loan will be greater because it accrues interest for more years.
- Annual loan limits. The maximum amount possible to borrow is typically a year’s cost of education minus any financial aid received from other sources.
- Loan Forgiveness, Cancellation. Because these loans are private, the options for loan forgiveness and cancellation that are available to students holdering federal student loans do not apply.
- To calculate loan repayment amounts.