Alternative Loans…… (PowerPoint) by fanzhongqing


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

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

• Alternative Loans are loans that
  are not federally backed or

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

• Tiered pricing based on borrower
  (and co-borrower) credit record
 Alternative Loans On the
• 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

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
•   Apply For A Student Loan
    Avoid High Interest Credit Cards & Don't Pay A Cent Until Graduation.
•   Easy Student Loan
    Borrow up to $45,000 a year to pay for your college expenses.
•   Astrive Student Loans
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•   Student Loan Solution
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•   Get a Student Loan Fast
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•   Student Loan Solution
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•   Get Loan Online, Quick Approve
    Bad Credit Rating? Need A Loan? We Have The Top Sites Here.
•   Get A Student Loan Fast
    Get Your Check in About a Week. Don't Pay a Cent Until Graduation.
•   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.
•   College Planning Guide
    Free Keybank College Planning Guide Order Your Copy Online Today.
     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


• 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
• Student may not be enrolled as a
  “regular” student
      Why Borrow an
     Alternative Loan?
• Bar Study Loan

• Residency Relocation Loan
    Types of Alternative
• 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
Loans NOT Certified by
• It’s between the lender and the
• No opportunity for school to
  conduct debt management
Loans NOT Certified by
• Consumer determines which loan to
  use, so he/she is not limited by school
• Flexibility in disbursement, etc.
• Amount is not tied to cost of
    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
• Repayment
 Selecting an Alternative
      Loan Lender
Should the student use his Stafford

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

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