Alternative Student Loans

Students with the following statuses (but not limited to just these) typically find use within the Alternative or Private Education Loan program:

• Nonmatriculated students
• International students
• Students attending less than half-time (six credits), contingent upon lender approval
• Students who have reached their federal aggregate or annual loan limits

Alternative loans are credit-based, private education loans facilitated by a non-federal third-party lender. Students interested in alternative loans may borrow up to the full cost of their education, minus all other aid. However, alternative loans generally carry a higher interest rate because they are based upon individual credit score. In accordance with the Higher Education Opportunity Act, sec 1021, Private Education Loan Disclosure and Limitations states that the borrower may:

• qualify for federal financial assistance through a program under Title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.), in lieu of, or in addition to, a loan from a non-federal source, and
• obtain additional information concerning such assistance from their institution of higher education.

To apply for federal Title IV grants and loans, complete the Free Application for Federal Student Aid (FAFSA).

Loans are funds borrowed now but must be paid back later. We advise all undergraduate and graduate students to consider borrowing alternatively, only after they have fully exhausted the use of Title IV grants and loan allowances. Financial planning is essential when determining how to pay for your education and can help to keep educational debt manageable.

We also acknowledge the right of a student to forego eligible Title IV aid in lieu of a loan from a non-federal source to solely finance all of their educational related expenses. However, if this situation applies to you, an Alternative Loan Release Form must be completed and submitted to the Office of Financial Aid – Alternative Loans department.

Alternative Loan Application Process

The City University of New York, of which Brooklyn College belongs, does not participate in preferred lender agreements. Students are free to select any lender of choice when deciding on an alternative loan lender, staying in line with the CUNY Financial Aid Model Code of Conduct (PDF). We can, however, offer you some guidance for the application process stated within the Higher Education Opportunity Act and the Truth in Lending Act.

Disclosure Required in Private Education Loan Applications and Solicitations

In any application for a private education loan, or a solicitation for a private education loan with requiring an application, the private educational lender shall disclose to the borrower, clearly and conspicuously:

• “(A) the potential range of rates of interest applicable to the private education loan;
• “(B) whether the rate of interest applicable to the private education loan is fixed or variable;
• “(C) limitations on interest rate adjustments, both in terms of frequency and amount, or the lack thereof, if applicable;
• “(D) requirements for a co-borrower, including any changes in the applicable interest rates without a co-borrower;
• “(E) potential finance charges, late fees, penalties, and adjustments to principal, based on defaults or late payments of the borrower;
• “(F) fees or range of fees applicable to the private education loan;
• “(G) the term of the private education loan;
• “(H) whether interest will accrue while the student to whom the private education loan relates is enrolled at a covered educational institution;
• “(I) payment deferral options;
• “(J) general eligibility criteria for the private education loan;
• “(K) an example of the total cost of the private education loan over the life of the loan:
  • “(i) which shall be calculated using the principal amount and the maximum rate of interest actually offered by the private educational lender; and
  • “(ii) calculated both with and without capitalization of interest, if an option exists for postponing interest payments;
• “(L) that a covered educational institution may have school-specific education loan benefits and terms not detailed on the disclosure form;
• “(M) that the borrower may qualify for Federal student financial assistance through a program under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.), in lieu of, or in addition to, a loan from a non-Federal source;
• “(N) the interest rates available with respect to such Federal student financial assistance through a program under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.);
• “(O) that, as provided in paragraph (6):
  • “(i) the borrower shall have the right to accept the terms of the loan and consummate the transaction at any time within 30 calendar days (or such longer period as the private educational lender may provide) following the date on which the application for the private education loan is approved and the borrower receives the disclosure documents required under this subsection for the loan; and
  • “(ii) except for changes based on adjustments to the index used for a loan, the rates and terms of the loan may not be changed by the private educational lender during the period described in clause (i);
• “(P) that, before a private education loan may be consummated, the borrower must obtain from the relevant institution of higher education the form required under paragraph (3), and complete, sign, and return such form to the private educational lender;
• “(Q) that the consumer may obtain additional information concerning such Federal student financial assistance from their institution of higher education, or at the website of the Department of Education; and
• “(R) such other information as the Board shall prescribe, by rule, as necessary or appropriate for consumers to make informed borrowing decisions.”

Once the student chooses a lender, the application is processed by the lender fully. Only after the application is processed and the lender and student has agreed to the requested loan amount does the lender contact Brooklyn College for certification. The student may be contacted by the Office of Financial Aid – Alternative Loans department to discuss Title IV aid eligibility. Funds are then applied to your student account. Any credit balance remaining will be refunded to you.

Certification approval is still required by the school, as this is still an educational loan and cannot exceed your annual educational budget.

Funds are sent to Brooklyn College via paper check. In most instances students must endorse the check before the funds can be applied to your student account. The Office of Student Payment Services will notify you when the check is ready to be endorsed.

Self-certification Forms

Private loans lenders are required to provide new loan disclosures to borrowers. They are also required to collect additional information from you on a Private Education Loan Applicant Self-Certification Form, which includes the following:

• Cost of Attendance: an estimate of tuition and fees, room and board, transportation, and other costs for the period of enrollment covered by the loan.
• Estimated financial assistance: all federal, state, institutional (school), private, and other sources of aid. Your estimated financial assistance may be obtained at anytime on the CUNY website, by logging in and going to the CUNY’s Online Center for Admissions and Financial Aid > Financial Aid > Awards. You can also use your CUNY financial aid annual award letters. If the loan you are currently applying for has already been listed as an award, do not include it as current aid on the self-certification form.

The Self-Certification Form should not be submitted to the Office of Financial Aid. It is filled out by the student and submitted directly to the lender.