Even though you are not eligible to apply for federal funding because of your status as a Special Student, you can explore the Alternative Loan market to help fund your educational costs.
Unlike the Federal Loan Programs, alternative loans are not regulated by the government. Each lender has its own set of application, credit, and co-signer requirements, and interest rates are variable, not fixed. Generally, alternative student loan payments are deferred while the student is in school (with the interest on the loan accruing). Students should inquire whether this is an option for their loan and for how long the loan will be deferred.
In choosing a lender, it’s always a good idea to start with a lender that you currently work with or you know has been in the student loan business for a significant amount of time. Be cautious of lenders whose names you do not recognize or those who offer you 'teaser' or introductory rates or prize incentives. Below are some questions you should ask when considering an alternative loan lender.
- What is my interest rate? Lenders will advertise ‘as low as’ rates but it’s important to know what your rate will be.
- How often will the interest rate change and how will I be notified?
- What fees will be charged (reducing the proceeds)?
- How often do you capitalize interest on the loan? Lenders who capitalize interest less frequently will save more money over time.
- Is there a prepayment penalty?
- Can I defer payments while in school or if the student has financial difficulty?
- What benefits or rate discounts are offered, and what conditions have to be met in order to obtain the benefits?
- Does the lender have any local presence (if that is important to you)?
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