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Alternative Education Loans
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Preserve & Expand Access to Low-Cost Alternative Loans

EFC Members – while considered part of the private loan market – are distinct from traditional commercial financial institutions that make and service student loans. As state-based, nonprofit entities, EFC Members are driven by a public purpose mission to expand borrowers’ financial knowledge, prevent over borrowing, and promote positive repayment behavior.

EFC's Alternative Loan Advocacy Priorities

Preserve Tax-Exempt Bond Financing (Private Activity Bonds) for Student Loans
Expand Refinancing Authority of Nonprofit and State-Based Organizations
Amend the Preferred Lender List Statute
+ Update “Qualified Scholarship Funding Corporation” Rules

2016-2017 Alternative Education Loan Programs
Read the 2016-2017 Alternative Education Loan Handbook here.

The organizations listed in the handbook represent the 19 active state-based loan programs offering low-cost alternative loans and/or an education refinancing loans. During their 2015-16 fiscal year (for most, July 1 – June 30), these organizations made more than 87,000 loans to more than 76,000 borrowers, totaling $1.1 billion. Collectively, their outstanding portfolios include 1.56 million in loans totaling $11.25 billion, representing more than 628,000 borrowers. There are currently 18 nonprofit or state-agency student loan organizations offering alternative education loan programs to help cover the cost of higher education — funding the gap between federal loans, grants, and scholarships and the total cost of attendance. These organizations advise borrowers to exhaust federal Stafford loans, scholarships, and grants first and to only use private education loans if needed to cover remaining expenses.

Additionally, eleven of these organizations also offer education refinancing loans and one organization exclusively offers education refinancing loans. These education refinancing programs make education debt more manageable for families by providing a refinancing tool that consolidates high-interest rate education loans into a single loan, reducing monthly payments and, in many cases, overall debt burden.

A key feature of each alternative loan provided by EFC Members is that they have both a fixed interest rate option and a variable rate option. The fixed interest rate on many of these loans is less than five percent, with origination fees as low as zero percent. The majority of these loan programs require a credit-worthy borrower or co-signer, resulting in extremely low default rates; some that are less than one percent. Many programs also include borrower benefits, including: interest rate reduction options for automatic payments, loan forgiveness for students who work in a critical field in the organization’s state, a death and disability forgiveness provision, and a co-signer release benefit.

Please note that all information published in this handbook is current as of the date of publication and is subject to change. Please refer to the individual organization’s website for the most current rates and terms on each loan program.