It’s a time college students dream about – just one school term left, then commencement, partying, some precious time off before a job search or graduate school. But students whose last terms are at the wrong time of year may find themselves out of money, out of time, and out of options.
Anthropology senior Amanda Amato was set to graduate after Summer Term. When she applied for summer aid, however, she was told that she had no Stafford loans left over from the fall, winter and spring to pay her summer tuition.
Students who wish to attend Portland State during the summer must fill out a separate request for summer financial aid. Upon completion of the form, many students find that they have already used up their loan money and their only option is to find an alternative loan.
According to Frederick Fuentes, assistant director of financial aid, 194 of the 3,420 students who applied for summer aid received alternative loans, while nearly 3,000 received whatever Stafford loan money they had left. While Fuentes said he has seen a few cases like Amato’s, they are not commonplace.
"There’s the odd situation," he said, "but it’s not an epidemic."
Amato is not sure if her credit and employment status will allow for an alternative loan. If not, her mother may need to foot the bill so she can graduate.
"Neither of my parents makes very much money," she said. "I don’t feel OK about that."
A private loan in six steps
Apply for summer aid – The financial aid office will raise your yearly budget or "cost of attendance" and determine if you have any Stafford money left to borrow. If you don’t, you are eligible to seek an alternative loan. This process can take over a month.
Determine what type of private loan you need – Alternative loans can be deferred for six months to a year after graduation, but the amount borrowed is limited to what the school determines you are eligible for. Personal educational loans can be taken out regardless of your cost of attendance, but the lender may require you to begin paying it back immediately.
Choose a lender – Compare interest rates, lengths of deferment, and any processing and loans fees that may be charged. Many companies that grant alternative loans, such as Wells Fargo are the same lenders who finance Stafford loans. Others, like Campus Door, specialize in alternative loans.
Apply for a loan
Find a cosigner – If you do not meet the lender’s credit requirements, you may be given the option to find a creditworthy cosigner. Some companies required that you reapply for the loan.
Wait – If your alternative loan application is accepted, the school must approve the borrowed amount and the funds will be disbursed through the school just like other types of financial aid.
Biology junior Brenna Lee knows how difficult it can be to get an alternative loan with less-than-perfect credit. Last summer when she found that she had classes to make up, she applied for six or seven loans but was unable to get one or find a cosigner.
"I had just enough to cover my tuition and was looking for a job," Lee said. "When you’re between the ages of 20 and 25, finding someone willing to cosign is hard to come by."
Political science senior Leticia Chavez had her godfather cosign last summer for a personal loan so she could go to Washington, D.C., to be an intern for Congressman David Wu. Because she had no credit, she couldn’t get an alternative loan and was not given the option to look for a cosigner. Unlike alternative loans, personal education loans are not deferred.
"It’s a lot of pressure. It’s a lot of stress," said Chavez, who has a six-year-old son and depends on financial aid for living expenses. "It’s been literally like fighting tooth and nail for any kind of assistance."
Chavez now pays $189 per month at 18 percent interest for her loan. Using up Stafford loans for the year "is almost impossible not to do," she said.
"The way aid is awarded is to give maximum eligibility for fall, spring and winter," Fuentes said. "There’s a big misconception that summer aid is like the rest of the year."
Fuentes recommends planning ahead as much as possible, putting in aid requests early, and saving financial aid money from the previous terms. In addition, the financial aid web site will be revamped this summer to be "less wordy" and make alternative loan and other aid information more visible.
"Financial aid shouldn’t be a student’s focus while they’re in school," Fuentes said.