Non Federal Student Loans

Q: For a student getting ready to enter college, what are all the options for non federal student loans available to help with college expenses?

A: Non federal student loans (more commonly known as “private student loans” or “alternative student loans”) educational loan products offered by banks, credit unions, and/or other private lending institutions. Non federal student loans should be considered only after you have exhausted all of your Federal Financial Aid and free money options. Federal student loans typically offer the lowest interest rates and most flexible repayment options, and free money options (such as scholarships and grants) are money for college that will not have to be repaid.

Federal Financial Aid can be obtained by filing a FAFSA at www.fafsa.gov. Federal Financial Aid for college includes federal student loans, federal grants, and work study opportunities. Federal Financial Aid is “need-based”, which means the financial information provided on your Free Application for Federal Student Aid (FAFSA) will be used to calculate your eligibility for all sources of Federal Financial Aid.

Unlike federal student loans for college, non federal student loans (private student loans) are not based on financial need, but rather on your credit. If you have poor or little credit history, obtaining a creditworthy cosigner can help you when it comes to securing non federal student loans. Many students use private student loans for bridging the gap from what they receive in Federal Financial Aid for college, and what their total college expenses are. There are many different non federal student loans and lenders out there. If you decide to utilize non federal student loans for college, it is important for you to do some comparison among different lenders to ensure you are getting the best possible deal.