Alternative Loan

An alternative student loan (also known as a private loan) is a private educational loan offered by private lenders, such as banks credit unions. Read all of the terms and conditions before applying for any type of loan.

Some key differences between federal and private loans:

Alternative Loans

Federal Direct Stafford Loans

Lender sets the terms & conditions

Terms & conditions are set by the federal government

Loan terms vary from lender to lender

Loans are guaranteed by the federal government

Generally have a higher variable or fixed interest rate

Federal government determines the interest for the loans. Interest is fixed

Higher interest may increase the total repayment amount

Repayment plans vary

Interest received will depend on your credit score

No credit check required

Repayment may begin while in school

Payment deferred while enrolled halftime or more

Before applying for alternative loans, students should consider lowest-cost options first, i.e. grants and scholarships (which do not have to be repaid) and federal direct loans (which have low, fixed interest rates). 

Interest rates and rate accural

Type of Loan

Interest rates for 2018-19    Academic Year

Daily accrual while in school on a  $10,000 loan

Daily accrual after 6 Month Grace Period on a  $10,000 loan

Federal Direct Stafford Subsidized

5.05%*

*$0

$1.38 per day

Federal Direct Stafford Unsubsidized (Undergrad)

5.05%

$1.38 per day

$1.38 per day

Federal Direct Stafford Unsubsidized (Graduate Student)

6.60%

$1.80 per day

$1.80 per day

Federal Direct PLUS (Grad or Parent)

7.60%

$2.08 per day

$2.08 per day

Alternative Loan

Varies by credit       4-15%

$1.09-$4.10 per day

$1.09-$4.10 per day

*Subsidized loans do not accrue interest while student is enrolled at least half time or during the 6 month grace period after graduation.

Before Applying for an Alternative Loan:

  • Student must be awarded financial aid
  • Student must be enrolled in courses for the semester. SJSU will only certify for Fall, Spring, Summer, or the current academic year
  • Open University Students are considered non-matriculated. Student must apply with a bank or credit union that allows non-matriculated status. 

Application Process

  1. Select a lender by going to www.elmselect.com. In the "School Search" box, enter San Jose State and select program from drop-down list. The applicant will then contact a lender and complete an application. Note: Students can apply with any bank or credit union that offers student loans. Elmselect is a great resource to compare lenders, but it is not a comprehensive list.
  2. The lender will complete a credit check and make an approval or denial. The lender will contact you if any additional information, or if a co-signer, is needed. The applicant will receive various disclosure statements from the lender explaining interest rates, terms, fees, and total cost of the loans. The lender may ask for a self-certification form.
  3. Once the applicant has been approved and the lender has received all required documentation the lender will notify SJSU to complete a certification form. The form verifies the student's enrollment data, cost of attendance and estimated financial assistance. Remember: The school cannot certify more than your cost of attendance minus other aid received. Certifications can take 2-3 weeks to certify.
  4. Funds are received and posted by the Bursar’s office. For questions regarding funds received, contact the Bursar.

Students that have questions regarding certification or loan amounts should contact the Financial Aid & Scholarship Office at 408.283.7500 or fao@sjsu.edu.