Alternative loans, also called private loans, are designed to help you meet your financial need beyond the funds schools allocate in financial aid packages. They can also be the difference in your ability to pay for the schools you most want to attend. Whenever you apply for financial aid, the school's Financial Aid Officer (FAO) will use the federal methodology (the formula we use in our EFC calculator) or the institutional methodology (believe it or not, the institutional formula is even more complex than the federal) to determine the size of your financial aid package. If the government determines you have an EFC of $20,000 a year for school out-of-pocket, the school will make up the remainder of the tuition with an aid package consisting of federal loans, grants, work study and/or scholarships. However, if you can't meet that expected family contribution number to start with, alternative loans make up the difference.
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