Alternative Loans

What is an Alternative loan?
The 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.

What are the Qualifications?
To qualify, a student must be enrolled full, half, or at least part time at an eligible school and student must meet the credit criteria. The Alternative loan is taken in the student's name and often requires a credit-worthy cosigner.
Note: Qualifications may vary from lender to lender

Miscellaneous information:

  • Alternative loans are not Federal loans like a Stafford, Perkins or Plus loan;
  • The submission of the FAFSA is not required to be considered for this type of assistance; however students are advised to complete the FAFSA and apply for federal grants, scholarships and federal student loans first.
  • 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.

Note: For more information regarding available assistance we have provided the following links:

What is the interest rate on an Alternative Loan?
Alternative loans are variable interest rate loans.  In addition, interest rates may vary from lender to lender.

Note: 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 do I request Alternative loan funds and what are the application requirements?
To be considered for this type of aid, a student must complete an application through a bank or credit union of his/her choice. Call or visit a lender and/or visit your lender's web site. Lenders normally have Alternative application forms available online. On-line is usually the quickest way to apply.

You will be required to sign an Alternative loan promissory note. When you sign this form, you're agreeing to repay the loan according to the terms of the note.

Note: If you are completing a paper application, you will need to forward it to your lender to be processed. The paper process usually requires a longer period of time to process.

How and when do I get my Alternative loan money?
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.

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.

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.

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.

Note: The disbursement process may vary from lender to lender.

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

To check if your Alternative Loan funds have been received and applied to the student's UMFK student billing account, go to MaineStreet.  Log in using your campus email ID and Password.  In MaineStreet go to the Student Service Center,  here you will find your billing information and financial aid information under the Finance section.   If an "Alternative Loan" is listed as a payment, this means that the amount shown has been received and deducted from the student's bill. Review the amounts for accuracy. If a bill is paid in full and any balance remains, that balance will be refunded to the student. Contact the UMFK Business Office at 207-834-7552.

What 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 Web site.  Repayment options may vary from lender to lender.

What lender(s) did I borrow from and how can we contact them?
A borrower should retain and file all paper work records on all of their loans.

If you are still unsure as to who your lender was for your Alternative loan, you may want to check with SallieMae and/or Nelnet. Since the majority of UMFK's loans are processed through these two servicers. You may also call them and/or visit their Web site for more information.

Loan Servicer Telephone Number Web site. Addresses
FISC 1-800-370-3472 or 207-783-2928 www.fiscsolutions.com
Nelnet 1-888-486-4722 www.nelnet.net
Sallie Mae 1-888-272-5543 www.salliemae.com

LoanLocator is the National Student Loan Clearinghouse's newest Web site service, designed specifically to help student borrowers track their education loans. Available through www.nslc.org, LoanLocator delivers to students an up-to-date list of loan providers and means for contacting them via telephone or Internet.

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 Web site. Web sites are usually the best place to begin looking for information. Simply do an online search by entering pertinent key words such as "repayment" or "deferment".

Where can I find more information?

(Last updated 5/19/09)