Top 3 Alternative Student Loan Lenders1. Wells Fargo is my top choice for student alternative loans.Wells Fargo offers loans to full-time students, part-time students and even partly part-time students. In fact, the only requirement is that you are attending a legitimate school at any level. 2. Chase Student Loans. 3. Citi Assist Health Profession Loans. Student Alternative Loans on the RiseStudent alternative loans are on the rise. Many students, especially older students, poorer students and unemployed students are turning to private lenders when their federal loans run out or the yearly allotted amount simply doesn't cover expenses.According to the US Department of Education, $134 billion dollars of federal financial aid was delivered in 2010, to 14 million students. Let's see... do the math, hmmm... uhm -- that's $9571.42 per student. The maximum federal grant awarded to an undergraduate student (via a Pell grant) is $5,550. That means $4021.24 per student, or 42%, went to pay for administrative costs? Am I missing something? Student Alternative Loans Bridge the GapRegardless as to how efficient (or inefficient) the system for disbursement of free financial aid largesse is -- the amount of grant aid can't possibly cover the rising tuition rates, cost of living, and cost of course materials. Students can also quickly run through the limit on Federal direct loans -- leaving students high and dry before they've garnered the prized diploma. Student alternative loans to the rescue. But what are the pitfalls? What is the best long term strategy and where can a student find a lender willing to loan money to students with no credit, little credit or bad credit? Peer to Peer LendingSome students have been turning to peer to peer lending at online sites such as Prosper.com, LendingClub.com and PeerLendingNetwork.com. Students can list their financial need and be rewarded with fractional loans from many different people. If enough people decide the cause is worthy enough and the credit risk is low enough the entire loan request will eventually be funded. Peer to peer lending is not a good choice for low, bad or no credit rating students. The interest rates for bad credit at peer to peer lending sites can be as high as 30%. The better option is for the student to improve their credit rating, even if it means taking a job for a year, and then taking student alternative loans with decent interest rates. Direct Loan CapsUnder the federal direct loan program, which doesn't require credit worthiness, dependent students can borrow a total of up to $31,000 over the course of their schooling. Independent students can borrow up to $57,500. With the average cost of tuition at a four year private college hovering at nearly $30,000 per year - it won't take students long to blow through the federal loan borrowing cap. They might just squeeze through four years at a state college with an average tuition rate of $9,000. Students are traditionally poor but they still have to sleep somewhere and eat something during the four magical years. With tuition eating up the entire federal direct loan - students need alternative loans just to feed their pie hole. Home, with Mom and Dad, (and the full fridge) never looked so good! Can Student Alternative Loans be Discharged via Bankruptcy?No. Even student alternative loans are subject to the bankruptcy exception laws.Presently, a bill in Congress, HR 5043, is seeking to alleviate this student loan trap. Before 2005 private student loans were dischargeable in a bankruptcy. Then congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, and it was signed into law by President Bush. The new HR 5043 bill would allow students to discharge student alternative loans in a bankruptcy. The lobby against HR 5043 is well funded, well organized (it's mostly large banks) and it has an anxious dog in the fight, so I wouldn't hold my breath waiting for this bill to become law. Students should just count on the fact that any and all risk associated with student loan default will land on them... and hard. Students Take All the Risk - Some Will LoseIndividual lives will be ruined by the associated student loan risk. That's a given in the current equation. This is why we have bankruptcy laws, in the first place - to prevent financial stalemate. Bankruptcy allows individuals to fail (just like corporations) and then to pick up the pieces and move on. Disallowing the discharge of student loan debt will cause a certain percentage of permanently failed individuals in our economy. Does that seem wise to you? The wisdom of congress has decided that instead of spreading out the cost of student loan default to the lenders (who then build the cost into the student loans) -- as with all other consumer and commercial loans -- it's being placed squarely (and weirdly) on the shoulders of individual students. Our current student loan model is essentially a slave, or indentured servant system. A system in which a few students will find themselves wallowing in for the rest of their lives. Once you take out that student loan - you have signed your future over to Uncle Sam. For this reason I do not recommend students take out non-dischargeable student loans. Not even student alternative loans. However, the reality is that without student loans there will be no college for many, many students. I implore my readers to realize that when signing a student loan promissory note -- you are balancing on the edge of a dangerous cliff. It may turn out well for you - and I hope it does. The odds are in your favor. But if something goes wrong - if you lose your job, get sick, have a motorcycle accident, get in over your head, get the rug pulled out from under you, the economy goes belly up, you have a messy divorce, you get in trouble with the law, you lose a court case, a judgement is placed against you, a tornado kills your business, a client sues your company -- any number of things that can happen in life -- you may find yourself chewing on a choking student loan with ballooning fees and interest you can't possibly repay... with no relief in sight. No way to discharge the obligation and start over. NO WAY TO START OVER. Stuck. Forever. Until the day you die. You may find yourself staring at the very ugly, underbelly of a federal government who is now garnishing your wages, withholding your social security, your disability, your professional license and trashing your credit rating (thus your future job prospects and business dealings) because long ago you had a dream. And it was funded with a non-dischargeable student loan. Beware of loans. Non dischargeable loans? Forget about it!
Congressional Bill HR 5043
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