Illinois State University

Choosing an Alternative Lender

How do you find an alternative lender that is right for you? Use this list to learn more about alternative (private) loans and choosing a lender!

Estimating Your Indebtedness

Code of Conduct

For Illinois State University's Alternative Loan Policies, please read our Code of Conduct.


A borrower must submit a signed self-certification form to the lender.  This form, which is completed and signed by the student, must show the student’s cost of attendance, expected family contribution, estimated financial assistance, total aid and the maximum private loan amount allowed.  For assistance completing the self-certification, please contact your counselor.

Self-Certification Form

Alternative Loans

Private banks and loan companies also offer student and parent loans. Known as “alternative loans,” these loans often:

  • have variable interest rates,
  • base rates on the borrower’s credit score, and
  • require a co-signor.

While these loans help many students afford to go to college, it is critical you understand the terms of all of your loans, regardless of the source. Make sure your post-graduation repayment plan is reasonable. Federal student loans may be deferred if you cannot find a job, but alternative loans often cannot be. Before you borrow, it's a good idea to estimate your post-graduation indebtedness.

Before you apply for an alternative loan, you should consider the Federal Direct Parent Loan for Undergraduate Students (PLUS).


Alternative Loans vs. PLUS Loans

  Alternative Loans Federal PLUS Loans
Interest Rate

Variable, usually no cap. Usually reset quarterly or monthly

Rate currently fixed at 7.21% (July 1, 2014-June 30, 2015)


Not federally insured and typically does not offer discharge in the event of disability or death

Federally insured and discharged in the event of total and permanent disability or death of student or parent


Borrowers must meet minimum income and debt-to-income ratio requirements or have a qualified co-signer

Approval is not based upon income, financial need or a debt-to-income ratio


Students can apply online. Supporting documentation is generally required (proof of income, co-borrower addendum, etc.) Promissory Notes must be completed each year

Parents can apply online at Must also complete the Master Promissory Note, which is generally good for 10 years


Cannot be added to a Federal Consolidation Loan

Can be consolidated in a Federal Consolidation Loan


Varies by lender and may begin immediately or be deferred until six months after student ceases half-time enrollment

Generally begins 60 days (unless deferred) after the funds have been disbursed, and has repayment term of up to 10 years


Deferment is generally available while a student is enrolled at least half time

Deferment and forbearance options are available

Things to Consider Before Borrowing

  • Who is eligible to borrow the loan? Is a co-signer required?
  • What is the minimum and maximum loan amount per year?
  • What is your lowest interest rate and fee combination and how can I qualify for it? Will a co-signer help reduce that rate? Is the rate fixed or variable? Does the interest rate have a cap?
  • What fees are applied to the loan and when are they applied?
  • What is the Annual Percentage Rate (APR)?
  • When is the loan disbursed and where are the funds sent – directly to the borrower or to the school?
  • Are interest and/or principal payments deferred while the student is in school? 
  • What are the repayment options and are there any repayment benefits? What proportion of your borrowers actually receive these benefits?
  • Can the loan be consolidated with other loans?
Illinois State University

Office of Financial Aid
Hovey Hall 101
Campus Box 2320
Normal, Il 61790
Phone: (309) 438-2231
Fax: (309) 438-3755
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