Alternative Loans

Institutional scholarships, outside scholarships, and state and/or local funds may fall short of students' anticipated budget for educational expenses. Alternative (credit-based) loans from private lenders are one source of funding that may help compensate for any shortfall. However, parents and students should be aware that these loans are a more sophisticated and expensive way of borrowing and often require a credit worthy co-signor. Be sure to read all the information available on these loans to ensure that you choose the lender with the terms best suited to your needs.

Due to the complexity and multitude of available private educational loans, the college can offer only general information on these loans and cannot assist students in choosing a lender, filling out an application, or processing any other aspect of this type of loan. Regarding private educational loans, the best source of information is the lender.

When considering whether or not to borrow using an alternative loan there are some important concepts to keep in mind:

Keep borrowing to a minimum. First consider ways to save money for college. Next consider cutting personal spending, getting a federal work study job to help with expenses or taking on a roommate to share rent and monthly expenses.
Keep debt with only one or two lenders. Most likely you will be graduating with federal student loan debt which will involve a monthly loan payment (the average for this $12.17 per $1,000 borrowed). If you borrow from multiple lenders, you will have multiple monthly loan payments, one for every lender! Remember, alternative loans cannot be consolidated with federal loans as they are totally different programs.
Be a good consumer and do your research. Make a list of key questions and ask each lender the same questions and compare the results. Make your final choice of lender based on this comparison. Here are some sample questions:

Is the interest rate fixed or variable? If variable how often does it change?
Is the interest rate tied to the prime rate or the Libor rate?
How does the LIBOR rate differ from the prime rate?
Is the interest rate "capped" at a certain percentage so it cannot go higher?
Do the loan payments ever escalate?
How often is the interest "capitalized?" Explain capitalized interest.
Is there a grace period for repayment?
How long can repayment be for?
Is there a penalty for late payments? If so how much?
Is there a penalty for paying the loan off early?

Have the lender estimate the amount of your monthly payment based on what you will be borrowing. Project the total amount you will have borrowed by the time you graduate and see what that payment would be.
Some other things to consider: Will you need a credit worthy co-signor? If not this year, how much debt can you have before your lender will require a co-signor? Do you have a credit worthy co-signor if needed?

Students may choose a lender from the college's or any lender they believe best meets their needs. The college selects and recommends lenders who have successfully been making student loans for years and who offer competitive pricing, reliable technology, quality services and products to borrowers. These lenders work effectively and efficiently with the college and borrowers and are dedicated to delivering quality customer service. Availability, problem solving, and quick response times are among the expectations of a successful working relationship with lenders. Feedback from our students indicate these lenders have established a trusted working relationship with our borrowers.

NASFAA (National Association of Student Financial Aid Administrators) recommends these for analyzing, calculating and comparing loan prices.

The Savannah College of Art and Design adheres to the following rules in processing alternative loans:

•	All students who meet the criteria for federal aid eligibility must complete the federal aid application process and take advantage of all other aid programs before we will certify an alternative loan. Any alternative loan certification requests received prior to the student completing the federal aid process will be held and certified at the time that federal aid is awarded.
•	Students must apply directly to the alternative loan lender online, by phone or by mail. The college will certify completed applications submitted by the lender to the college. Original applications submitted to the college will be returned to the student for submission to the lender.
•	Students are responsible for accurately representing their current degree and enrollment status in school to the lender. Most alternative loans require students to be in degree seeking programs and attending at least half time (10 quarter hours). Some loans are available to students in certificate programs.
•	The credit check on most alternative loans is good for 90 days before the first day the loan begins. The college will only certify alternative loans for dates that correspond to the terms the loan is intended for. Applying too early and/or using false dates may result in the credit check on your loan expiring before it is certified. Students are responsible for reapplying for loans that expire before certification.
•	Some lenders will allow a student to borrow for past due balances but with restrictions. When applying for a loan for a past due balance and/or previous aid year you must indicate this to the lender at the time of application. Failure to do so may result in the loan being denied when certified by the school, which must report the intended use of the funds.

SCAD can certify loans only up to the amount of a student's budget minus all other aid (for the same terms as the loan period) — the maximum loan amount. All loans will be certified for either the maximum amount or the amount requested if it is less than the maximum available to you.

The approved loan amount is evenly divided among the quarters of enrollment indicated in the "loan period" section of the certification request. The loan period may include only terms within the current award year. The amount shown on your award notification may or may not be reduced by fees assessed by the lender. The actual amount disbursed by the lender is what will be applied to your charges on your student account.

If an alternative loan certification request is received and there is no remaining need (i.e., awarded aid equals the budget), a written clarification is required (For example, if a maximum PLUS loan has been processed and awarded so there is no remaining need left). SCAD must be informed whether to cancel, reduce or leave the PLUS loan intact before the alternative loan application can be processed.

If the loan is processed correctly, i.e. for the amount requested and the terms indicated on the loan certification request, then no changes will be permitted. If additional monies are needed, a new loan may be applied for and will be processed based on student eligibility for these additional monies.

Once a student has received an Award Notification from SCAD, any future changes to that award, including the addition of an alternative loan, require that the student's entire financial aid award be reviewed by our technical processors. The lender is not asking for certification that you are a student here; rather, it is requesting certification that the loan amount you have requested is within your academic budget. During peak times this can take up to four weeks, as re-processing requests are secondary to all requests for initial processing.

All alternative loans will be certified with up to three disbursements, depending on the number of terms that the loan is intended for or what the lender allows. Disbursements will be scheduled for the first business day following the drop/add period of the quarter for which the funds are intended or within five business days of certification, whichever is later. However, disbursement will only happen when the funds are received by the college from the lender. Delays may occur due to issues or problems experienced by the processing of the loan by the lender. Students should contact their lender directly for assistance in these cases. This is SCAD's policy on disbursement of alternative loans and may supersede any options the lender may offer.

The college will receive most alternative loan funds electronically from the lender and will apply the monies directly to the student's account. Disbursements received in the form of a co-payable check require the student's signature before they can be placed in the student's account. Contact the office of the bursar for assistance with this.

Alternative loans are not subject to the same regulations as federal loans for withdrawals. Once a student has received the benefit of an alternative loan disbursement, those funds are treated as personal payment from the student. Each alternative loan lender has its own guidelines concerning how any or all of a disbursement may be returned to avoid interest and/or fees.

It is your responsibility to contact your lender if you drop below half-time status, or withdraw from any quarter for which you have received an alternative loan disbursement to see how this may affect your loan.