Alternative Loans

Private Education Loans

Alternative education loans, also known as private education loans, help bridge the gap between the actual cost of education and the limited amount the government allows a student to borrow in its student loan programs.

The Merrimack College Office of Financial Aid recommends the use of private educational loan programs after all other types of financing options are considered. We encourage you to fully research the loans and lenders that best fit your needs. Private loans are available to help cover the remaining balance after financial aid applies. All private loans are subject to credit approval with the respective lender.

ELMSelect provides a truly neutral lender and product comparison tool. It allows students to evaluate, compare and select a lender that best fits their financial needs. You can review lenders on one page, narrow the list of lenders, and compare them side-by-side.

  • You can begin the loan application process from ELMSelect by selecting your program from the drop down menu.
  • Choose Undergraduate, Graduate, or Parent.
  • You can then “View Loans”, which will take you to the list of lenders, or complete “Financial Fundamentals” (optional).
  • As you hover over each lender, it will allow you to “View All” of their loan products, or “Apply now” if you have decided on a lender.
  • You can also choose to compare up to three lenders at a time.
  • Lenders are displayed based upon their historical lending with our students. If you wish to use another lender that is not on this list, you have the right to do so.

Before borrowing an education loan, carefully consider present level of debt and repayment obligations on all loans.  Determine how much is needed to borrow by working out a budget for educational costs and subtracting all other resources (aid offered and accepted).  Remember, the ability to obtain loan funding is largely based on credit-worthiness, and with most programs, the co-signer’s credit-worthiness.

To satisfy the requirements of the Higher Education Act of 1965 and the recently amended section on the Truth in Lending, private/alternative educational loans borrowers must now be provided with several disclosures from the lender.  Borrowers must complete a Private Education Applicant Self-Certification Form when applying for non-federal loans. This form must be submitted to your lender during your application process. Please do not forward this to our office. When electronically applying on-line, the lender will provide the borrower the opportunity to fill out required information before they can proceed with the review and approval of the loan.

On the Private Education Applicant Self-Certification Form, borrowers will be required to complete the cost of attendance for the period of enrollment covered by the loan, as well as the estimated financial aid.  Definitions are listed on the second page of the form: Cost of Attendance, Estimated Financial Assistance, Lender, Period of Enrollment, Private Education Loan and Title IV Student Financial Aid.

Private loans are offered by private lenders and there are no federal forms to complete.  Eligibility for private student loans often depends on a borrower’s and co-borrower’s credit score.

Private education loans do not have the same benefits as the federal education loans, but are less expensive than credit card debt.  Federal education loans offer fixed interest rates, flexible repayment benefits, and forgiveness options. For these reasons, we recommend students exhaust eligibility for federal student loans before resorting to private student loans.

Private student loans have variable or fixed interest rates, with the interest rate pegged to an index, such as SOFR or PRIME, plus a margin.

The Secured Overnight Financing Rate (SOFR) is the benchmark index that many U.S. banks and financial institutions now use in replacement of the London Inter-bank Offered Rate (LIBOR).

Note: Students may obtain their individual Financial Aid award on myMack under the Student Info Tab.  For more information on the Cost of Attendance figures that students will need to use to complete the Self-Certification form, please refer to the Tuition and Expenses web page.

A student is limited to borrowing their cost of attendance less any other financial awarded (institutional, federal, state, outside scholarships). Students can borrow education loans to pay for tuition, fees, room and board, as well as books, and other personal or educational supplies. For questions on your individual cost of attendance, please contact our office.

Education loans are designed to pay for direct costs first. Any excess borrowed will be available to the student in the form of a refund check. Refunds are not available until after loans have disbursed, which occurs after the add/drop period. For the Fall semester, this is typically the first week in October. For the Spring semester, this is typically the beginning of February.


Interest Rate

The cost of borrowing money, usually expressed as a percentage, paid to the lender.

Why am I charged interest?

  • Borrowers pay interest for the privilege of borrowing.
  • Lenders charge borrowers fees and interest for the use of their money.
  • Interest is charged because the lender is taking a risk lending money to a borrower.

Fixed Interest Rate

An interest rate that remains the same for a set period of time, regardless of the changing underlying interest rate index.

Advantages of a fixed interest rate

  • Borrower will know what all future monthly payments will be.
  • Monthly payments will never change.
  • Borrower can calculate how long it will take to pay off all the interest and principal.

Disadvantages of a fixed interest rate

  • Might have a higher monthly payment than with other interest rate loans.
  • This is due to the fact that lenders are making borrowers pay for this luxury.
  • Interest rate will never go down even if underlying interest rate index goes down.

Variable Interest Rate

An interest rate that moves up and down based on the changes of an underlying interest rate index.

Advantages of a variable interest rate

  • Offer the most attractive interest rates at the beginning of the loan.
  • A borrower’s interest rate can go down if the underlying interest rate index goes down.
  • Might be a cap on the interest rate.

Disadvantages of a variable interest rate

  • As interest rate fluctuates, monthly payments will fluctuate.
  • There may not be a cap on the interest rate (Massachusetts capped at 18 percent).
  • Interest rate and monthly payments will be adjusted monthly, semi-annually, annually, etc.