Many of the Federal student loan programs need no credit check and provide students with significant financial help. These programs are however need based and usually carry other criteria that might make it difficult to qualify. Even when students do qualify, these loans only cover part of the whole cost of education in the majority of instances. If students are caught in this situation then they may turn to alternative college loans to make up the difference.

Private alternative educational loans too have their own difficulties. A credit check will almost always be required and this is not a problem as long as you have a good credit history. The problem is that 'good' is a relative term and if your credit history is not good enough then you might find that you are paying higher than the standard rates of interest.

Beyond the quoted interest rate there are further monetary implications to alternative loans. Fees will normally be tacked on to nominal loan amounts and a fairly modest loan of $3,000 might easily have fees of 4% added before distribution. That means $120 of the total loan is never seen by the student but nevertheless had got to be paid back. As a very rough guide, 3% in fees is equal to 1% on top of the stated interest rate.

But private loans do carry a couple of advantages.

The first and possibly the most obvious one is that funds are available. Private lenders make a profit from the interest and fees that they charge and so have an interest in making money available to borrowers and will try hard to ensure that each applicant qualifies. Federal lenders by contrast work under an inflexible set of criteria and there is typically no real appeal if your loan application is rejected.

Avoiding that unfriendly and often irrational bureaucracy is another benefit of private loans. Lenders maintain customer service departments that are there specifically to deal with questions so that customers can get the answers that they need. Federal loan programs usually have contacts and help available as well although the answers you get are hit or miss in terms of quality.

Other practical considerations which make alternative loans especially desirable include:

The fact that students and parents do not have to fill out FAFSA (Free Application for Student Aid) forms and provide a mass of supplemental documentation. Private loan applications are simpler and indeed the whole process is easier. But, fees and interest rates might be higher or lower according to the specific loan program.

The most desirable private loans carry zero fees and rates of interest that are about equal to the prime rate. The 'prime rate' is the rate which banks charge one another or their biggest and most favored customers. If you are able to get a rate at prime then this is a good deal and getting a rate at 1% below prime is a truly great deal.

In order to obtain that type of loan it is normally necessary to have a great credit history or have a co-signer who has a very good credit history.

In the end, the only way to find out whether an alternative loan will suit your purposes is to get out into the marketplace and take a look at precisely what is available.