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San Diego State University

Financial Aid and Scholarships

Alternative (Private) Loans

Many lenders such as banks, credit unions, or other financial services companies offer non-federal, private education loans. Students who are not eligible for federal loans and students whose parents do not want to borrow a Parent PLUS Loan may want to consider borrowing from a private lender.

However, be careful when looking at alternative loans!

  • Private lenders may charge higher interest rates and fees compared to federal loans, and the interest rates are frequently variable.
  • Repayment terms are usually not as favorable for borrowers. 
  • Approval of private loans is typically based on your credit rating and debt-to-income ratio. 
  • Alternative loans more often than not require a co-signer, someone who promises to repay the debt if you are unable to do so.

The terms and conditions of federal loans are in general more favorable than alternative loans. However, if after exhausting all sources of federal funding you decide to borrow a private loan, ask questions and compare lenders to ensure you are making the best, most cost-effective choice.

For information about alternative (private) loans, see:

Research lenders

If you must borrow from a private lender, do your research. Compare interest rates, up front loan costs, and repayment terms.