Private education loans, also referred to as alternative loans, are designed to assist students who need additional funding to meet the gap between the cost of attendance and any financial aid . However, private loans may have disadvantages when compared with federal education loans. We strongly encourage you to use all available federal loan programs before using private loans.
Below is a chart evaluating the differences between federal and private education loans:
Federal Loans
Alternative Loans
Co-Signer Requirement
Perkins/Stafford: None
PLUS: Usually none
Usually yes
Credit Check Requirement
Perkins/Stafford: None
PLUS: Yes (however, debt to income ratio not included)
Yes
Deferment Types
Some options are available and guaranteed by Dept. of Education for Perkins and Stafford
Depends on Loan
Grace Period
Perkins: 9 months
Stafford : 6 months
PLUS: none (however, deferment or forbearance may be an option)
Depends on Loan
Interest Rate
Fixed
Usually variable; may or may not be capped
Loan Fees
Perkins: No fees
Stafford : Up to 4%
PLUS: Up to 4%
Some options are available and guaranteed by Dept. of Education for Perkins and Stafford
Generally none
Penalties for Early Repayment
None
Depends on Loan
What to consider when choosing a private loan:
What is the interest rate for this loan?
Is the interest rate fixed or variable?
Is there a cap on the interest rate?
Are there any disbursement or repayment fees?
Will the fees be subtracted before disbursement?
Will the fees be included in any capitalization?
Will funds disburse directly to the school, or will the check be sent to me directly?
Is there a grace period?
When does repayment begin?
Is there any penalty for paying the loan off before the scheduled amount of time?
What will be my monthly payment amount?
What will the overall repayment amount be, including interest assuming full repayment period?
Will I be able to afford this payment along with other loan payments?
Are there any deferment or forbearance options for reenrollment at another school?
Are there loan forgiveness, deferment or forbearance options if I become unemployed or disabled?
What are approval rates in general for the loan?
What is the quality of customer service they provide?
The Duke University Financial Aid Office is committed to providing our students and their families with accurate information about the best available rates, benefits and service. Our research indicates that the lenders included in our Recommended Lender List offer students excellent customer service, competitive interest rates and borrower benefits. However, Duke University students are not required to select a lender from this list; students are free to select any eligible lender of their choice for their loans. If you select a lender that is not listed on our recommended lender list you will need to contact your lender of choice to complete your application directly with the lender.
