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San Diego State University

Financial Aid and Scholarships

Alternative (Private) Loan Repayment

When selecting an alternative loan lender, ask if they will service the loan until it is paid in full, or if they sell their promissory notes to another lender or loan servicing agency after collecting the loan processing fees.

  • You should know with whom you will be doing business, now and when you repay your loan.

Coordinating with other loans

SDSU Financial Aid and Scholarships will coordinate your alternative loan with the other aid you are receiving.

  • Note: If you receive an alternative loan after receiving other financial aid for the semester, you may be required to repay some or all of the aid you receive.

Repayment time or prepayment penalties

The time required to repay the total amount varies.

  • Does the lender offer repayment options? A longer repayment term increases the total amount of interest paid even though the annual percentage rate may be lower than one with a shorter repayment term.

Grace period or deferment

The lender may or may not offer deferment or a grace period before repayment begins. Remember, with private loans, interest continues to accumulate and may capitalize during deferment.

Comparison of federal and private loans

Alternative loans are non-federal loans made by a private lender. Visit the Federal Student Aid website for a comparison of federal student loans versus private education loans.