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Alternative Loans

The Office of Financial Aid realizes that need-based financial aid sources are limited and do not always cover the cost of attendance at MSU Denver. Private Loans, also known as Alternative Loans, help a student cover the cost. This is in addition to the limited amount the government allows you to borrow under its Federal Direct Stafford and PLUS Loan Programs. This Alternative Loan information has been prepared to assist you in selecting a loan program that best suits your particular needs. As you explore these options, please consider the following information.

What is an Alternative Loan?

Alternative Loans are offered by private lenders and have their own applications to complete. These loans are typically more expensive, in terms of interest rate, than Federal Direct Stafford Loans. A FAFSA (Free Application for Federal Student Aid) is not required to apply for Alternative Loans. However, you should research all possibilities for scholarships and other forms of federal and state financial aid before considering applying for an Alternative Loan.

Qualifying for an Alternative Loan

Alternative Loans are based on the creditworthiness (and sometimes income) of the borrower and/or the co-signer. Some loans require a co-signer and may offer lower interest rates if a co-signer is provided. Loans may require a minimum of 1 up to 6 hours of enrollment. Some lenders may require a student to be making Satisfactory Academic Progress. If you are not making Satisfactory Academic Progress, and the lender leaves the certification of your loan to the school’s discretion, we will not process the loan. All loan eligibility is based on the semester/term cost of attendance minus all other financial aid including Federal Direct Stafford and/or PLUS Loan amounts. These amounts vary per student. The cost of attendance is determined by the Office of Financial Aid and the Colorado Commission on Higher Education. Please contact the office to determine what your cost of attendance will be and if it can be adjusted.

What to Look for in an Alternative Loan

• Interest Rates: Which loan offers the best interest rate? How often does the interest rate vary? (i.e. monthly or quarterly)? What is the interest rate based on (i.e. Prime Rate, LIBOR, Treasury Bill, etc.)? What rate will you qualify for based on your creditworthiness? Interest will accrue during any payment or deferment period and will be capitalized - (added to the original principal amount) - at repayment. Please note that although you may start out with a very low rate of interest, over the life of your loan that rate may change a great deal. Make sure that you can afford these fluctuating interest rates.
Loan Fees: What, if any, fees are charged an up-front and/or back-end fee that is subtracted from
your total loan amount prior to sending your loan proceeds to the school. A back-end fee will be added to the amount borrowed.
Repayment Terms and Period: Many lenders offer different repayment options, including deferment options of up to six months after you graduate or attend school less than half time. Ask if repayment begins immediately when you receive the loan, or if it can be postponed until after you graduate or leave school. You should make regular payments, and if possible make payments against the accrued interest, whenever you can afford to. However, if you cannot, you should find a loan that allows you to defer your payments. Ask how long you will have to repay the loan. If your
education expenses require borrowing a large amount of money, you may need a longer time to repay your loans.
Repayment Incentives: Most lenders reward borrowers who pay on time. Ask your lender if they offer auto debit. Check to see which loans offer the best borrower benefits to help you save on principal and interest payments, and/or possibly shorten your repayment period.

How do I Apply for an Alternative Loan?

Before borrowing an Alternative Loan, you should carefully consider your present level of debt and repayment obligations on all loans. Determine how much you need to borrow by working out a budget for your educational costs and subtracting all your resources for those costs.

Borrow only what you need. These loans must be repaid in addition to any federal loans you may borrow.

• Shop for the most competitive rates and borrower benefits, and choose the one that best fits your needs.
• Go to the Lender’s website and complete the “online application”as directed. Most lenders offer quick “conditional pre-approval” on their websites or by phone (check
with you chosen lender).
• Check with your lender regarding an online Master Promissory Note (MPN) process. If you receive
an MPN to sign, please follow directions of either returning it to the lender or to the Office of
Financial Aid.
• Alternative Loans are not federally regulated and thus may need additional documentation to determine qualifications, such as a copy of the borrower’s and co-signer’s tax returns to verify income, and possibly other documents. These forms should be sent directly to the lender.
• Check your lender’s website or call their customer service center with any questions you may have
regarding current interest rates, loan terms, etc.

Disbursement of Alternative Loans

All funds from Alternative/Private Loan Lenders disburse electronically. Please keep in mind that processing of a Private Alternative Loan can take 3-5 weeks from the date you initiate the loan. Once the Office of Financial Aid receives the funds, an email will be sent to your MSU Denver email account informing you that the loan funds are available. If you owe a current tuition and fee balance, the funds will first be used to pay these fees and the remainder of the loan will be given to you in the form of a check. If your tuition and fee account balance is zero, you will receive the entire loan amount in the form of a check or direct deposit.

REMEMBER to borrow only what you need. Be an informed borrower. Know your lender and the total amount you have borrowed, the interest rates applicable to your loan, and your repayment requirements for all loans you have borrowed. Keep all your loan records in one file to assist you with tracking.

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