Alvernia University recommends that its students first utilize Federal funding but sometimes students have found that in addition to federal funding, a private student loan can be helpful in financing their educational costs.
When is a private student loan appropriate?
If your family has exhausted more attractive financing options such as the tuition payment plan through Tuition Management Systems and the Parent PLUS Loan, then you might want to consider a private alternative loan. A private alternative loan is a loan that the student borrows, however, in most cases the student will need to secure a credit-worthy co-signer. The student and co-signer should be fully aware that the loan is in both the student's and co-signer's name. If the borrower defaults (stops making payments or is late in making payments) on the private alternative loan the co-signer is fully responsible for the loan.
Students should always take Federal student loans first before considering any private student loans. Stafford loans have a fixed interest rate. Most Parent PLUS loans have a fixed interest rate. Most private student loans require a credit-worthy co-signer. Please be aware that the lenders/loans have variable interest rates and have no cap; these interest rates may change monthly or quarterly depending on the bank/lender. Interest does accrue on private/alternative loans, and may be deferred while in school, or depending on the lender, must be paid while in school. We recommend, when possible, to pay any accrued interest while in school and during the six-month grace period.
While you may apply on your own for private student loans, some students will need to apply with a creditworthy cosigner, such as a friend or family member. We strongly urge all students to apply with a cosigner as it may improve the chances of loan approval and may help quality for a lower interest rate.
Private Loan Disclosure Statement:
Federal loan regulations, set by the Department of Education, require a college or university that chooses to provide a Recommended Lender List to its borrowers to disclose their method of selecting the lenders included on the list. This information is provided to potential borrowers about the methods and selection process utilized by Alvernia University's Office of Student Financial Planning in the creation of the 2013/2014 Recommended Lender List.
According to Section 682.212 of the Federal Register, published by the Department of Education, "A school may, at its option, make available a list of recommended or suggested lenders, in print or any other medium or form, for use by the school's students or their parents, provided such list:
- is not used to deny or otherwise impede a borrower's choice of lender
- does not contain fewer than three lenders that are not affiliated with each other and that will make loans to borrowers or students attending the school
- does not include lenders that have offered, or have offered in response to a solicitation by the school, financial or other benefits to the school in exchange for inclusion on the list or any promise that a certain number of loan applications will be sent to the lender by the school or its students" (U.S. Department of Education, 2007).
Why a Preferred Lender List?
- Provides a comparison of selected lenders in relatively consistent terms, reducing confusion and assisting borrowers and their families in making the best-informed decisions.
Steps Taken With Decision Process
- A Request for Information (RFI) was sent out to those lenders most often chosen by Alvernia students with a list of questions regarding their products and services. These questions included the following topics:
- Interest Rate Structure
- Cosigner requirements/release options
- Loan fees
- Past due balance option
- Customer service info/bilingual options
- Annual limits
- Eligibility requirements
Once all information had been gathered and considered, the committee within the financial aid office made a decision for the 2013-2014 academic year on particular criteria (which are listed below). The responses guided our decision-making for 2013-2014.
Criteria Used to Select Lenders
Borrower Benefits—In considering benefits, it was important to evaluate the lenders who offer borrower benefits to students as well as the percentage of the actual borrowers who qualified for such benefits. Such borrower benefits that were evaluated included the following:
- Interest rates and terms
- Cosigner release options
- Availability of repayment options, back-end borrower benefits (i.e. principal reduction, interest rate reduction, etc.)
Quality of Lender Products and Services—In evaluating lenders' quality of products and services, it was important to determine which lenders provide exceptional customer service to its borrowers as well as the school. Such quality of products and services criteria used to evaluate each lender was as follows:
- Ease of application process
- Web-based application and services
- Proactive customer communication, including easy access to borrower's current and cumulative borrowing and estimated repayment information
- A toll-free number for information and advice
- Timely and responsive processing of loans including resolving issues
- Knowledgeable customer service representatives; bilingual options
- Dedicated service or marketing representative assigned to the school
- Lender's practice to recommend students to maximize Federal financial aid first
Lender Stability—With regulatory changes and market instability affecting lenders' decisions to remain in the student loan industry, it was important to select lenders who are reliable and will continue to service borrowers for future years. Such lender stability criteria used to review each lender included the following:
- Mission Statement
- Number of years in the student loan business
- Source of stability of capital used in providing loans
- Relationships with other loan partners
- Existing relationships with guarantee agencies
- Default rates
- Reputation at the local, state, regional and national levels
- Marketing practices including promotion of products and services
- Demonstrated security of borrower information
View Alvernia's Recommended Lender List*
*This is not a comprehensive list of all the lenders who currently market private/alternative student loans. The list is in alphabetical order, not in any order of preference. If you would like to use another lender that is not on this list, you have the right to choose whatever lender you wish. Some states have their own private loans for residents of that state. Some state specific alternative loans include: Alaska, Maine, Massachusetts, and New Jersey. Please check with your state to see if private state loans are available. The interest rate and fees on private/alternative student loans are dependent upon many variables, one of which is the FICO score of the borrower and/or co-borrower. Please review the information listed below for each bank/lender very carefully before making your choice, and you may want to visit the lender's website for more details.
The Office of Student Financial Planning
400 Saint Bernardine Street
2nd Floor – Bernardine Hall
Reading, PA 19607
Mon - Th: 8:00 am – 6:00 pm
Fri - 8:00 am – 4:30 pm
Summer Office Hours*
Mon - Th: 8:00 am – 5 pm
Fri - 8:00 am – 4:30 pm
*Starting May 28th to August 16th