Alternative and Private
Alternative or private loans are nonfederal loans offered by some banks and credit unions.
The purpose of an alternative loan is to supplement a student's financial aid package. Alternative loans are not federally endorsed or guaranteed, but they generally must be certified by the office of financial aid at Notre Dame. An alternative loan cannot exceed your cost of attendance (financial aid budget) minus all other financial aid.
Alternative loans should be a last resort and used only when all other resources have been explored or for students whose enrollment circumstances prevent them from being considered for Federal Direct Subsidized/Unsubsidized, Parent PLUS or Grad PLUS loans. Student who are not eligible for federal student aid based on their citizenship status (such as F-1 or work visa holders) may wish to explore this option as well. If you have not done so already, we advise you to consider other financial aid and/or federal loans first. For more information, visit www.ed.gov/finaid.
You are encouraged to research the loan product that is best for you by checking details on lender websites and by contacting the lender's customer service department with questions. The Project on Student Debt offers advice for students searching for alternative loans. More information about private student loans is also available on the finaid.org website.
Unlike Direct loans, alternative loans are based on creditworthiness, so the initial step in applying is a credit check with the lender. Students are encouraged to apply with a co-signer to improve their chances of being approved. Click here for tips for selecting a co-signer.
Since the loans are not federally endorsed, each lender's loan program is different. Each loan varies on interest rates, fees charged, the amount you may borrow (minimum and maximum) and repayment terms.
Note: Notre Dame of Maryland does not endorse any specific lender or group of lenders. The application for an alternative student loan is made directly through the lending institution. As a part of this process, the office of financial aid will certify enrollment and other information for the borrower.
If you choose to apply for a private loan, you will need to follow these steps:
- Select the lender of your choice and contact them either on-line or via phone to begin the pre-approval process. We require that you initiate the process by seeking pre-approval.
- Your lender will perform a credit review. If approved, your lender will require you to complete a promissory note and other necessary forms, including the Self-Certification form.
- Your lender will send us an electronic request for a certification.
- Once we receive the request for certification from your lender, we will certify your loan within 3-4 weeks. You may check WebAdvisor for the status of your loan.
- Once the certification is completed, your lender will prepare funds for disbursement.
- The loan will be in hold status until half-time enrollment has begun. Once the student has begun 6 credits for the semester (or 5 credits for PHR students), the loan funds will be released.
- The funds will then be applied to your Notre Dame account to cover all expenses. If applicable, a refund check will be issued if there is a credit balance.
Students may be looking for a private student loan in the following situations. It is the student's responsibility to inform the lender of the special circumstances and confirm if eligible:
- if the loan is for a balance from a prior semester
- if the student is not meeting Satisfactory Academic Progress (SAP) requirements
- if the student is enrolled less than half-time
- if the student is not enrolled in a degree-seeking program
Questions to Ask Your Alternative Student Loan Lender
As with all borrowing, students and parents must carefully consider the terms of an alternative student loan before borrowing. Some of the questions they should ask an alternative student loan lender might include:
- What are the fees associated with the loan?
- If the interest rate is variable on the loan, how high can it go, and how often will it be adjusted?
- How is the interest rate calculated?
- What rate can I get on a fixed-rate loan?
- What are the terms of repayment?
- How much will my payments be if I borrow $x?
- Do I need a co-signer?
- Are there any enrollment requirements to receive the loan?