Alternative Loans…… (PowerPoint)

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					   Alternative
   Loans……
A Beacon of Hope for Your
       Students?
      Alternative Loans….
   A Beacon of Hope for Your Students?

• What Are Alternative
  Loans?
• Why Borrow an Alternative
  Loan?
• Types of Alternative Loans
• Debt Management Tactics
What are Alternative Loans?

• Alternative Loans are loans that
  are not federally backed or
  insured.

• Typically the lenders are taking
  the financial risk on these loans
  How Lenders Minimize
   Risk with Alternative
          Loans
• Tiered pricing based on school
  information
• Use of Co-borrower

• Tiered pricing based on borrower
  (and co-borrower) credit record
 Alternative Loans On the
           Rise
• In 2005-06, private loans represented
  20% of all education borrowing - $17.3
  Billion (An increase of 900% in inflation-adjusted
  terms from 1995-96 to 2005-06)

• Federal education loan programs
  totaled $68.6 Billion in 2005-06



Source:
ACE Issue Brief titled “Who Borrows Private Loans?” Aug
  2007 – author Jacqueline E. King
  Why such an increase?
• Rising cost of tuition

• Direct to Consumer campaigns
    Why Such an Increase
•   Alternative Locator
•   http://www.theeasystudentsloans.com/
•   Apply For A Student Loan
    Avoid High Interest Credit Cards & Don't Pay A Cent Until Graduation.
    www.gmacbankfunding.com
•   Easy Student Loan
    Borrow up to $45,000 a year to pay for your college expenses.
    moneyforcollege.suntrust.com
•   Astrive Student Loans
    Learn Now Pay Later - No Payments Until 6 Months After Graduation.
    www.GetAstriveLoan.com
•   Student Loan Solution
    Up To $40K For College, Go To Your First Choice School, Apply Online.
    www.1.nationalcity.com
•   Get a Student Loan Fast
    Apply in Minutes, Check Sent to You. No Payments Until Graduation.
    www.TuitionWiseLoans.com
•   Student Loan Solution
    Borrow Up To $40K Per Year Now With No Payments Until You Graduate.
    www.citizensstudentloan6.com
•   Get Loan Online, Quick Approve
    Bad Credit Rating? Need A Loan? We Have The Top Sites Here.
    www.hatarka.com
•   Get A Student Loan Fast
    Get Your Check in About a Week. Don't Pay a Cent Until Graduation.
    www.ThinkStudentLoans.com
•   Chase Loans
    Low rates, flexible student loan repayment options. We can help you get up to $40,000 per school year.
    Official Chase student loans Web site.
    www.collegeloansite.com
•   College Planning Guide
    Free Keybank College Planning Guide Order Your Copy Online Today.
    Key.com/collegeguide
     Why Borrow an
    Alternative Loan?

        No loans



“My school does not participate in
 the FFEL program.”
        Why borrow an
       Alternative Loan?
• Span the gap between Cost of
  Attendance and Aid


  Grants Scholarships
  Federal Loans Work
                   Alternative Loan

                                      COST

• Additional costs for special
  programs, like Study Abroad
     Why Borrow an
    Alternative Loan?
• Student is not maintaining
  Satisfactory Academic Progress
• Student is not enrolled at least
  half-time
• Student may not be enrolled as a
  “regular” student
      Why Borrow an
     Alternative Loan?
• Bar Study Loan

• Residency Relocation Loan
    Types of Alternative
          Loans
• School certified loans




• Loans NOT certified by the school
What type of loan is best?



The answer is the same as it is for
 all financial aid questions . . .



                    It depends!
What type of loan is best?
• All are not created equal
  –   Commercial Paper
  –   Libor
  –   T Bill
  –   Minimum credit score requirement
  –   Credit of borrower
 School Certified Loans
• Can control the amount of loan a
  student borrows (Cost minus
  other aid)
• Record of alternative loans used
  by your students
• More accurate information if you
  are engaged in debt management
  counseling.
Loans NOT Certified by
       School
• It’s between the lender and the
  borrower
• No opportunity for school to
  conduct debt management
  counseling
Loans NOT Certified by
       School
• Consumer determines which loan to
  use, so he/she is not limited by school
  recommendation
• Flexibility in disbursement, etc.
• Amount is not tied to cost of
  attendance
    Debt Management
• What are you doing?
• Are you concerned about your
  students borrowing patterns?
 PLUS                 Alternative
• Parent debt         • Student debt (but
• Fixed interest        parent might be
  rate                  co-borrower)
• No FAFSA            • Variable interest
  required (at some     rate
  schools)            • No FAFSA
• Additional Unsub
  available if PLUS
  is denied
GPLUS             Alternatives
• Security        • Flexibility
• Benefits        • Greater amount
• Possible        • Deal with lender
  consolidation     only
• In-school       • No FAFSAA
  deferment
• Repayment
  options
 Selecting an Alternative
      Loan Lender
Should the student use his Stafford
              lender?


Yes               No
 Combined bill?    Perhaps not as
 Less likely to    flexible a
 default?          program?
                   Perhaps won’t be
                   the best deal?
Questions/Comments
   Alternative
   Loans……
A Beacon of Hope for Your
       Students?

				
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