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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. These loans are typically borrowed by students who are not eligible for or who have exhausted their federal loan eligibility. Private loans frequently carry higher interest rates and fees than federal loans and have less attractive repayment terms. Approval of these loan 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. Interest rates are variable, meaning they can change on a monthly basis, and may be determined by the information in your credit report.

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.