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Financial Aid

Alternative Loans

What is a Private Alternative Loan?

The Private Alternative Loan is designed to help students to bridge the financial gap between college costs and traditional funding sources such as federal loans, grants, and scholarships. Arrangements to borrow this type of loan are made through a bank or credit union. As part of the eligibility requirements, the borrower will generally need to pass a credit check. This is a private loan established between a student borrower and a bank or a credit union. The alternative loan is in the student's name and often requires a credit-worthy cosigner. Note: Qualifications may vary from lender to lender.

Important things to know:

  • The submission of the FAFSA is not required to be considered for this type of loan; however students are advised to complete the FAFSA and apply for federal grants, scholarships and federal student loans first! They are usually the better deal and offer the most benefits!
  • It is strongly recommended that students apply for all Federal Stafford/Direct loan eligibility before applying for an alternative loan. Please be aware that if you do not apply for your entire Federal Stafford Loan eligibility, certification of your alternative loan could be delayed.
  • Alternative loans are not Federal loans like a StaffordPerkins or the Parent/Plus loan.
  • It is in the student's best interest to compare the loan features and benefits from lender to lender before borrowing this type of loan.

What else can I do or consider before applying for an alternative loan?

  1. Summer Earnings - having a summer job can help save money for upcoming college expenses.
  2. Look into the college's Payment Plan
  3. If you are a dependent student, your parent(s) may want to consider borrowing through the Federal Direct Plus loan for parents.
  4. Home Equity - Using a home equity loan to help pay college costs is another option that some families utilize.
  5. Alternative (Private) Education Loans - Private loans lack many of the repayment benefits of federal student loans. One should carefully research the terms and conditions and only consider the alternative loan as a last resort.
  6. Learn about the alternative loan before applying. For more information, please visit these links:

Questions to ask the lender before applying for an alternative loan:

  1. Can the loan be used to pay prior balances?
  2. Is there a minimum amount I have to borrow?
  3. Are interest payments required while I'm in school?
  4. More questions and a list of private lenders are available here.

How do I apply for an alternative loan?

  1. Initiate the application process by choosing a lender and contacting them directly or online to begin the preapproval process. Lenders normally have alternative application forms available online. Online is usually the quickest way to apply.
  2. Your lender will perform a credit review. If approved, your lender will require you to complete a alternative loan promissory note. When you sign this form, you're agreeing to repay the loan according to the terms of the note. This pre-printed promissory note may be mailed to you to complete and return back to the lender or it may be available for you to complete online from your lender's website.
  3. Complete the Private Education Loan Applicant Self-Certification form. Complete and return the paper version back to your lender. This from may also be available for you to complete online.
  4. All required forms must be completed and provided to your lender and received by your lender before the next step will take place.
  5. If your loan request is approved, the lender will notify you and your school. Your school will be asked by your lender to certify your loan. Because of awarding regulations, a school may certify a loan for an amount less than what you have requested and/or have been approved for by your lender.
  6. Once your lender has received all the necessary information from you and the school, you will be sent additional disclosures from your lender. Once all requirements are met, your lender will send your loan funds to your school's Bursar's/Business Office.

Loan funds will be applied to a student's school bill. Funds in excess of the student's bill will be returned to the student in the form of a refund. Funds received and/or your refund status can be monitored by the student on his/her's billing detailed screens in MaineStreet (under: Self Service > Student Center > Finances; select "Account Summary" in the drop down box available).

Is there anything else I may need to do?

Action from you may be required if you do not wish to borrow from the Direct Federal Stafford or Federal Perkins loan programs. If so, you will need to complete a UMFK Bypass Direct Loans form (for the 2017-2018 Academic Year) and return it to UMFK before your Alternative loan request will be processed.

UMFK's Lender List

You may select a lender from UMFK's Private Alternative Loan Lender List (or you may use a lender of your choice).

Note: There is no obligation for students to use a lender in UMFK's lender list. A student may apply for an alternative loan with a lender of their choice. The list is a tool for students to start their search and a way to compare different alternative loan options. Do keep in mind that if you select a lender that is not on our list, you may experience delays in receiving loan money since the school may not have a loan set up process established with this lender.

What is the interest rate of an Alternative Loan?

Alternative loans are variable interest rate loans. In addition, interest rates may vary from lender to lender.

As a student will I be considered credit worthy?

You can apply for this loan on your own or with a co-borrower. If you do not have an established credit history, applying with a co-borrower can help you. Interest rates and fees are based on the credit history of you or your co-borrower.

Other than interest, is there a charge to get an Alternative Loan?

Fees may be charged. Fees may vary from lender to lender.

How will I be notified of my eligibility?

If you apply for an Alternative loan, you will be notified by your lender. Your loan will either be approved or denied.

How much can I borrow?

Alternative loan borrowing limits vary with each student. The yearly limit is equal to student's Cost of Attendance minus any other financial aid. In other words, an Alternative loan, when added to all financial aid received (including Perkins, Stafford and Plus loans, Federal Work-study, grants and scholarships), cannot exceed the student's Cost of Attendance.

How can I determine the loan amount I am eligible to borrow?

This information will be available on MaineStreet (under Student Self Service > Student Center > Finances > Accept/Decline Awards). On MaineStreet a student can view their Financial Aid Award Notice by academic year or by semester. When applying for a loan, you are applying for loan money to cover the Academic year, (i.e., two semesters), unless you are only planning to attend one semester. The borrower may accept a smaller Alternative Loan amount than the maximum eligibility amount that has been offered to the student by the school on the Award Notice. It is recommended that a student borrow only what is needed.

I've applied for my private alternative loan, now what?

Loan funds will be sent to your school by your lender. Loans can be disbursed in two equal disbursements/installments, (half of the total amount each semester) or in one disbursement for the total amount. Loan funds must first be used to pay for the student's tuition, fees, room and board and other school charges.

Your lender may transfer your loan funds to your school by electronic fund transfer (EFT). This method does not require you to sign a (paper) check and your loan funds will automatically be applied to your student account (at your school). If you have questions regarding aid received (on your account) or your school bill, you may view account transactions on MaineStreet and/or call the UMFK Business Office at (207) 834-7552 or the UMFK OneStop at: (207) 834-7605.

If the lender sends your loan disbursement by check, the UMFK Business Office will notify the student borrower for endorsement. The borrower will be instructed to return the signed check to the UMFK Business Office.

Funds are credited to the student's account when: the student is registered, the semester has begun, loan funds are available and the financial aid office can certify that the alternative loan and all financial aid the student is receiving does not exceed his/her Cost of Education.

If a credit balance remains on the student's account, as a result of the Alternative loan, the borrower will automatically receive the refund amount as a check or in cash. Any remaining loan money must be used for the student's education expenses. The disbursement process may vary from lender to lender.

How will I know if my loan funds have been applied to my student account/bill?

To check if your Alternative Loan funds have been received and applied to your UMFK student billing account: 

  • Visit my.umfk.edu
  • Login using your email username and password
  • Click on the MaineStreet icon (located on the left-hand side of the portal homepage)
  • Click on Student Self Service
  • Click on Student Center
  • Go to the Finances section of the Student Center

Note: Need help to navigate in MaineStreet? Click on the "User Guides & Demos" available in MaineStreet.

If an "Alternative Loan" is listed as a "Payment" on your bill in MaineStreet, then the amount posted has been received and deducted from your bill. Review the amounts for accuracy. If your UMFK bill is paid in full and any balance remains, that balance will be refunded to you. Contact the UMFK Business Office at (207) 834-7552 or the UMFK OneStop at: (207) 834-7605 to make arrangements to pick up or have your refund mailed to you.

What do borrowers need to know about paying back an alternative loan?

Loans require repayment and must be paid back. For more information contact your lender and/or go to their website. Repayment options may vary from lender to lender.

What lender(s) did I borrow from (in the past) and how can I contact them?

It is highly recommend for the borrower to keep copies of all paperwork received from the private lender in a file folder for future reference. It is the borrower's responsibility to keep track of any alternative loans that you may have borrowed.

Tell me more about loan repayment, deferment and forbearance.

A good place to begin looking for answers to these questions is with your lender or servicer. We recommend that you call your lender/servicer and/or visit their website. You may also search for this information by entering pertinent key words such as "repayment" or "deferment".

UMFK's Alternative Loan Code of Conduct:

Our list of alternative loan lenders has been researched carefully and compiled based on interest rates, origination fees, Satisfactory Academic Progress requirements, payment of prior balance options, repayment terms and options, enrollment options, as well as other factors. The information that is provided in this list will be updated for the 2012-13 academic year then reviewed every two years to give the best possible alternative loan options to our students. UMFK abides by the NASFAA Code of Conduct and Statement of Ethical Principles.

Where Can I Find More Loan Information?

Additional links and resources relating to Alternative Loans may be found under Additional Alternative Loan Resources.