Exit Counseling for Private Alternative Loans
You are being provided with this private alternative loan information because you have previously borrowed an alternative loan. As a borrower, you are obligated to repay your loan to a specific lender. Review this information to determine who to contact regarding the repayment of your alternative loan(s).
Alternative Loan Lenders
The terms and conditions of alternative loan programs vary widely. Therefore, it is important for you to contact the alternative lender(s) from which you borrowed your alternative loan(s). Since you have signed an application/promissory note for any alternative loans you borrowed, you should already know which lenders(s) have accounts for you. Please refer to your loan documents for contact information.
Contacting Your Alternative Loan Lender
Contact the lender(s) of your alternative loan(s) for answers to the following questions. Many of these questions are answered in your promissory note or loan agreement documents that you signed when you applied for the loan(s). When you signed the promissory note(s) or loan agreement(s), you agreed to all of the terms and conditions that were in effect at that time.
Interest Rates and Fees
- What is my interest rate?
- If the interest rate is variable, what is the maximum possible rate I could be charged?
- What is the minimum and maximum length of repayment?
- What is the payment amount?
- When is the first payment due?
- Is there a penalty for early repayment of the loan?
- Are grace periods, deferments, or forbearance offered? If so, what are the conditions and how is the interest capitalized during these periods?
Use the student loan repayment calculator determine the amount of your monthly payment.
- Are there any other borrower benefits or incentives (i.e., reduced interest rate for automatic payment agreements)? If so, what are the eligibility requirements?
- If I don’t qualify for a benefit, what is the appeal process?
- Can I access my information on the Web?
- Can I release my cosigner (if I have one) at a later date? If so, when?
Rights and Responsibilities
You have the right to:
- Receive a repayment schedule before the initial payment is due
- Be notified in writing if your loans are sold or transferred
- Request a deferment or forbearance if you qualify
You have the responsibility to:
- Repay your loan whether or not you have completed your studies, whether or not you are satisfied with your education, and whether or not you are able to find employment
- Make your loan payment(s) on time
- Inform your lender of any change to your name, address, Social Security card, or employer
- Notify your lender if you are having difficulty making payments
Managing Your Loan Debt
Your skill in managing your finances will have a substantial impact on your future. A good credit rating is essential when making a large purchase, such as an automobile or home. Some prospective employers also review credit ratings.
Careful planning and money management are very important, particularly when you are beginning repayment of student loans. To get a head start on the process, you may want to review and complete the repayment budget worksheet at the end of this document. Use the worksheet to determine what percentage of your projected income will be used for student loan payments.
As a general rule, your student loan payment(s) should be no more than 5-10 percent of your salary before taxes. For more strategies on how to live within your budget, visit You Can Deal With It.
If you're have having difficulty repaying your educational loans, either federal or private alternative, please be in contact with your lender to discuss your situation. There may be repayment, deferment, or forbearance options of which you are not aware. Ignoring the problem will only make matters worse.
Alternative Loan Consolidation
There are very few lenders who offer private alternative loan consolidation. For information on private alternative loan consolidation and lender options, please visit FinAid.org.
Before you decide whether or not to consolidate your student loans, please research the advantages and disadvantages to make sure you are making the best financial decision.
Frequently Asked Questions
What might happen if my student loan(s) are past due?
- Assessment of late payment fees and other fees to your account(s).
- Reporting of your account(s) to a national credit bureau as delinquent.
- Delinquent credit ratings may affect your ability to obtain loans and employment opportunities in the future.
- Assessment of collection/attorney/court costs to your account(s).
- Loss of all possible deferment/cancellation privileges.
What is deferment?
Deferment is a period of time in which approved borrowers are not required to repay their loans (principal or interest). The following circumstances may enable you to pursue a deferment:
- Full-time or at least half-time study
- Active military duty
- Service as Peace Corps or ACTION volunteer
- Unemployment due to injury
- Infant care
Deferment provisions vary, depending on the loan servicer and type of loan program. Several types of deferments are usually available on most student loans.
For more information on deferment options, contact your loan servicer.
If you do not qualify for a deferment but are still unable to make satisfactory repayment, you may qualify for forbearance.