Alternative education loans are private, credit-based, non-federal loans.
With the discontinuation of the Graduate PLUS Loan for new borrowers in 2026-2027, many students may find private loans are the best way to fund additional educational expenses. Students apply directly through a lender. The application process, requirements, and terms for private loans vary by lender. Eligibility is limited to your estimated cost of attendance, less any other aid (including scholarships and federal loans). Students are encouraged to borrow the minimum amount of loans needed to minimize debt.
Selecting a Lender
UAB does not endorse specific lenders, but we provide a historical lender listing through ELM Select. This is not an exhaustive list of lenders, but it is a great place to start your private loan search.
What should I take into consideration when applying for private loans?
There are a number of factors to review as you are exploring private loans. Students can apply to multiple lenders they believe would be a good fit for them. It’s important to compare your loan offers, taking all terms of the loan into consideration. We encourage you to keep these in mind when comparing your options.
Establishing and Building Your Credit
Many private loans require students and/or their cosigner to meet a minimum credit requirement. It’s important to establish and continue building your credit for best consideration of loan eligibility and terms.
Application Requirements and Options
There are several factors to consider when applying for alternative loans. Lenders take these factors into consideration.
Credit Score
Many private loans require students and/or their cosigner to meet a minimum credit requirement. Credit scores may also impact the terms of your loan, like your interest rate.
Multiyear Approval
Some lenders may provide an up-front multi-year approval, with only a soft credit inquiry for future year requests.
Cosigner
Lenders may require student borrowers to have a cosigner. Even if not required, some students may find it advantageous to have a cosigner for better loan options and terms. Cosigners can be your parent, guardian, another relative, or a willing sponsor. It’s important to understand the responsibilities a cosigner has. Students and cosigners are both listed on the loan, sharing responsibility. The loan will also be included in the cosigner’s credit history.
Interest Rates and Other Fees
As you are reviewing your private loan options, it’s important to compare interest rates and any additional fees associated with the loan. Lenders will often offer fixed and variable interest options. Variable rates may start low, but the rate can rise or fall as the rate indexes change. Check to see if there is a cap on the interest rate. We encourage you to explore the long-term aspects of these loans and rates to determine which would be best for you. Loans may also have additional fees, including a loan origination fee, that you will want to take into consideration as you are reviewing all terms of the loan.
Loan Limits
Lenders will have varying annual and aggregate, or lifetime, loan limits. UAB students can receive private loans up to their full cost of attendance less any other aid (including scholarships and federal loans).
Repayment Options
Specific repayment options are determined by the lender.
Grace Period
A grace period is a time following graduation or certain breaks of enrollment where you are not required to make payments to your loan. This allows you some time to get established before required repayments begin. When available, grace periods vary in length, from 6 months to 3+ years. It’s important to note that interest typically continues to accrue during grace periods.
Deferment
Lenders may offer various periods of deferment, where payments are not required. Interest typically continues to accrue during periods of deferment. Possible deferment options to explore are in-school deferment and residency or training deferments.
Length of Repayment
Repayments lengths vary across lenders, many ranging from 5 years to 15+ years.
In-School Repayment Options
Some lenders may require students to begin making payments while currently enrolled in medical school. If payments are not required, students may find it beneficial to make payments, whether a small monthly amount or interest-only payments, to minimize interest and lower your overall debt.
Cosigner Release
Lenders may have the option for cosigners to be released from the loan, typically following a set number of loan repayments by the student. Once a cosigner is released, the loan is then only listed under the student’s name.
Death or Disability Discharge
Determine if the lender offers a death and/or disability discharge.
Refinancing
Some borrowers may find it beneficial to refinance their loans sometime following graduation, providing you with better interest rates and repayment options.