ALTERNATIVE LOANS

Alternative Loans

Why would I need an alternative loan?

If the financial aid a student receives from CMU will not be enough to cover the costs to attend, the student and their parent(s) can decide to pursue other loan options. Unlike Federal Direct Loans, alternative loans are private supplemental loans that are NOT guaranteed by the federal government. These loans can supplement federal aid for creditworthy students and their families.

Do I have to apply for federal financial aid?

If eligible to file, CMU always recommends that a student file a FAFSA form and accept the federal financial aid offered to them (including the Federal Direct Loan). The federal loan programs will have the lowest interest rate for the student borrower.

What is the requested loan period?

Alternative loan applications will ask students for a requested loan period.  You should use the following dates:

  • Fall 2013 AND Spring 2014: 08/20/2013 to 05/3/2014 
  • Fall ONLY 2013: 08/20/2013 to 12/15/2013
  • Spring ONLY 2014: 12/24/2013 to 05/03/2014
  • Summer 2014:  05/19/2014 to 08/07/2014
  • Fall 2014 AND Spring 2015: 08/25/2014 to 05/09/2015
  • Fall ONLY 2014: 08/25/2014 to 12/13/2014
  • Spring ONLY 2015: 12/22/2014 to 05/09/2015

Be Wary of Private Loan Offers

The growing problems with private loans has led the House Education and Labor Committee to question the $85-billion-a-year student loan industry by asking the Federal Trade Commission to investigate the unfair and deceptive practices that lenders use to market their products and services to students. Following is a quote from the announcement of their request.

"Every day, millions of students receive marketing letters from private lenders - letters that are often intentionally designed to confuse or mislead students. These tactics are nothing short of predatory lending. No company should be able to get away with using aggressive scare tactics to profit off students who are already taking on enormous amounts of college loan debt. Just like any other group of consumers, students and their families deserve to be protected from any fraudulent or manipulative marketing practices."

College students are cautioned to be suspicious of unsolicited loan offers. Student loan debt can accumulate quickly and result in a lifetime burden of high payments and credit denials for automobile purchases, credit cards, and home mortgages. Private loans also can reduce eligibility for more desirable federal, state and college aid programs. To avoid these problems, read and understand the terms and conditions of all loans.

Michigan students are bombarded by media advertisements and mailings about private student loans.  The Michigan Student Financial Aid Association (MSFAA) reminds students and families to beware of loan offers you did not initiate. Deceptive marketing tactics are not illegal in the world of private student loans. It is always in a student’s best interest to explore federal loan options before applying for private loans. Here are some simple rules to follow when considering a private loan.

  1. All students should file the Free Application for Federal Student Aid (FAFSA) to determine eligibility for grants, work-study, federal loans, and other desirable forms of student aid.
  2. Students should only consider a private education loan if they have reached their federal loan borrowing limit.
  3. Undergraduate students and parents should compare private loan costs with costs for the Federal PLUS Loan.
  4. Graduate students can borrow under the Federal Graduate PLUS Loan and should compare PLUS costs to private education loan costs before applying for a loan.
  5. The financial aid offices at Michigan colleges and universities are staffed with knowledgeable people with years of experience who will be happy to answer your student aid questions.

Who should I borrow from?

CMU will process ANY alternative loan for which a student has been approved and has financial need up to the cost of attendance. CMU cannot choose a lender for you but can assist you in determining how much you can borrow. 

Students are encouraged to research additional lenders online by searching “alternative educational loans.” It is important that a student only apply for one alternative loan at a time.

Students should research private student loan options at reputable web sites such as: FinAid.org

BORROWING SENSIBLY

Although an alternative loan is a convenient source of additional funding for your education, it is important to budget and borrow carefully:

  • Consider ways to keep your costs down in order to limit your total loan debt.
  •  Once you decide to borrow, borrow only what you need, because you must repay loans, with interest.
  • Before you borrow, it is wise to estimate both the amount of debt you may be able to afford and the potential monthly loan payment you can expect after you graduate.
  • Also, take very seriously the responsibility of borrowing and repaying an educational loan:
  •  Be sure to read and understand the terms and conditions on your promissory note. You are agreeing to repay the loan with all the accrued and capitalized interest and deducted fees.
  • It is your responsibility to read and keep all your records and contact your lender regarding any changes in your status as a student.
  •  You are obligated to repay your loan regardless of whether you complete your education, are satisfied with your education, or are able to find a job.
  • Alternative loans can be consolidated but not in combination with Federal loans. The two loan types must be consolidated separately.

How conscientiously you make payments on your student loan will affect your ability to borrow for a car, a house, or other purchases in the future. If you are late with your student loan payments, it will have a negative effect on your credit history. On the other hand, repaying your student loan on time can help you establish and maintain an excellent credit history. ​

CENTRAL MICHIGAN UNIVERSITY

1200 S. Franklin St • Mount Pleasant, Mich. 48859
Phone: 989-774-4000

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