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Southern Oregon University

These are also referred to as alternative student loans: alternative or private loans are privately funded, generally provided by commercial lenders, and are not based on need, so no federal formula is used to determine eligibility. However, the amount borrowed cannot exceed the cost of education minus other financial aid. Interest rates and repayment terms vary but are generally less favorable than those provided through the William D. Ford Federal Direct Loan Program. Private loans are based on a student's credit score, and used to supplement the federal programs when the cost of education minus federal aid still leaves unmet need. Important things to consider when selecting the right lender and private loan for you:
  • Understand the ultimate cost of the loan over its lifetime. Compare annual percentage rates (APR) vs. interest rates and fees to determine the real cost of the loan. Find out how long you have to pay it off.
  • Be aware of what the monthly payments will be upon graduation or leaving school and how that will affect your lifestyle after college.
  • Find out what the "borrower benefits" really mean to you. How is each benefit achieved and how are they kept throughout repayment. What happens if you miss an "on time" payment?
  • Find out if the lender sells student loans. If your loan is sold, will any repayment incentives be honored by the purchasing lender?
  • Are there forbearance or deferment options? Understand what additional cost these may have for you.
  • How does the lender capitalize interest? (i.e. once when repayment begins or quarterly)
  • Notify your lender of any change in address, name or repayment problems. Lack of communication is one of the first steps toward delinquency.
  • Borrowers should always explore federal loan options first; private student loans and/or alternative educational loans may have higher interest rates and fees.
  • SOU does not have preferred lenders and students may borrow from the lender of their choice. A list of some popular lenders is provided by Finaid.org at http://finaid.org/loans/privatestudentloans.phtml