Alternative Loans

Before pursuing an alternative loan, we recommend that you compare its features to the PLUS loan (and state educational loans for residents of select states). To see a comparison of the PLUS loan and the alternative loan, please click here: http://www.pheaa.org/educationalloans/pdf/PLUS_vs._Alternative_Loans.pdf. Bear in mind that the Direct PLUS loan interest rate is 7.9%.

To assist in your effort to determine how much you should borrow, we encourage you to use the following calculators:

We also provide links to other calculators that you may find useful in your efforts to mitigate your college expenses.

Alternative loans...

  • have variable interest rates that have no caps. Interest rates are based on the LIBOR rate (http://www.bankrate.com/brm/ratewatch/other-indices.asp) or PRIME rate (http://www.bankrate.com/brm/ratewatch/leading-rates.asp).
  • may have additional fees of up to 9.5% of the requested loan amount
  • require credit approval
  • cannot have a maximum loan amount that exceeds the cost of attendance less the financial aid offered, up to an annual maximum stated by the lender, if applicable
  • usually have the student as the primary borrower. (A few lenders will allow other family members to borrow on behalf of the student. Be sure to call the lender to check on this feature.)
  • will usually allow students to defer payments on the loan while they are in school at least half time
  • will usually allow students to capitalize the interest accrued on the loan once they graduate or leave school
  • often allow a 6-month grace period before students begin repaying

If you choose to pursue an alternative loan, it is suggested that you speak to a financial aid counselor to explore your options first. If you are confident that you want to borrow an alternative loan, be sure to compare the costs associated with various loans before completing an application. Interest rates, fees, repayment periods, borrower benefits, customer service, and other features can vary significantly between loans. While many educational loans are available with no fees and interest rates less than 10%, other programs exist with fees up to 9.5% and interest rates over 14%. These higher rates can result in you paying thousands of dollars in additional costs. Be aware that some loan programs require you to make interest payments while in school and you will need to prepare for that requirement if you borrow the loan. The UR Financial Aid Office will NOT take in-school loan payments into account in our review of your aid package or consider it in appeals. Take the time to compare. We provide a worksheet that you can download and print to help in your loan comparisons.

If you've borrowed through an alternative loan program before, staying with the same loan program is often the best choice. Due to turbulent conditions in the student loan industry, the loan you have borrowed in the past may no longer be available. Therefore we recommend you start your alternative loan search early and, if you have used an alternative loan in the past, check to see the loan program still exists.. Please be aware that there are thousands of lenders who participate in student educational loans and you are welcome to pursue additional loans from any lender. To assist in your research, here are some websites that provide comparative information:

If you select a loan through a comparative website, be sure to go to the lender's website as well, to make sure you are getting the most up-to-date information about the loan and the other loan options offered by the lender before starting the application process. Finally, before completing an application, determine from the lender the answers to these questions:

  • How much may I borrow?
  • What are the fees associated with the loan?
  • What is the interest rate and how often will it change (e.g., quarterly)?
  • Do I need to be at least 18 years old to receive the loan?
  • Do I need a co-signer?
  • Can I receive a lower interest rate when I apply with a co-signer?
  • Can I defer payments while in school?
  • What are the terms of repayment?
  • Are there any penalties for paying the loan off early?

Disclaimer: The University of Rochester does not maintain a preferred lender list. Thus, the University has no agreements or relationships with any lenders and does not receive any benefit, financial or otherwise, from the use of alternative loans by students. For more information about the University's policies, please see our Student Loan Code of Conduct.