Alternative Education Loans

Private education loans not guaranteed by federal funds are commonly called “alternative loans” and have varying eligibility criteria determined by the individual lenders. We strongly recommend that students apply for all Federal Direct Loan eligibility before applying for an alternative loan. 

The Higher Education Opportunity Act of 2008 mandated a number of significant changes to provide more financial transparency to families who choose to utilize private educational loans. These regulations enhance the disclosure requirements through the Federal Truth-In-Lending Act (“TILA”) effective February 14, 2010. Specific changes include:

  • 3 separate financial disclosures throughout the loan application and approval process
  • Private Loan Borrower Self-Certification, and
  • The right to cancel within three business days of the loan process completion date.

Alternative Education Loan Options

The University of Southern Maine’s (USM’s) alternative loan lender list has been researched carefully and compiled based upon the quality of products and services they provide to students and families. Lender selection is reassessed every two years. There is no obligation to choose a lender listed. If you wish to use another financial institution, you have the right to do so.  ELMSelect is a tool for students to begin their search and compare. We encourage you to use the sort and filter option within the site to refine your selection for a private education loan that best fits your needs.

Lender comparison tool:

Questions to consider when comparing loan programs?

  1. Is eligibility for the loan income-based or credit-based?
  2. Does having a co-signer impact my loan decision and repayment terms?
  3. How is the interest rate calculated? Is it fixed or variable?
  4. Is there a grace period?  If so, how long?
  5. What are the repayment terms?
  6. Are there deferment, forbearance and cancellation provisions?  
  7. Must I maintain satisfactory academic progress?
  8. Is there a minimum enrollment requirement?
  9. Must I be enrolled in a degree program?
  10. Can the loan program be used to pay a past due balance?

The University of Southern Maine abides by the USM Student Loan Code of Conduct.