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Choosing a Lender
Choosing the right lender for your education loan is an important
decision and may save you significant amounts of money. You should
base your choice on two major criteria: borrower benefit programs
and customer service. Basically, borrower benefits are programs
that help reduce the cost of repaying your loan. Fairly typical
programs include payment of origination and/or guarantee fees, interest
rate/principal balance reductions for a certain number of on-time
monthly payments, and interest rate reductions for automatic payments.
Borrower benefit programs vary from lender to lender so you'll need
to check with each lender. Sometimes financial aid offices also
have borrower benefit program comparisons for families to use. Doing
your homework on choosing a lender will save you money when it comes
time to repay your loan.
When you are going through the student loan process, the financial
aid office will usually provide a "preferred lender list."
Preferred lenders may be chosen based on the following factors:
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1) |
customer service to
student borrowers and the financial aid office |
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2) |
borrower benefit programs
and the savings provided during the origination and repayment
process |
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3) |
electronic processes
that speed the loan processing |
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4) |
location
of the lending institution |
As a borrower, you may choose your lender, regardless of whether they
are listed on a "preferred lender list." Be aware that
if you choose a lender that is not on the preferred lender list,
there is a possibility loan processing may be delayed. Also, a
lender may have multiple lender codes, so make sure you are using the
correct lender code associated with the borrower benefit program in
which you are interested.
Here are some common questions you should ask your lender about
borrower benefit programs:
- What borrower benefit programs do you
offer?
- How do I qualify for your borrower benefit
programs?
- Which lender code do I use to be eligible
for the borrower benefit programs?
- What is an estimate on savings from
qualifying for the borrower benefit programs?
- Do you have a calculator to estimate the
savings based on different loan amounts?
- What is the percentage of borrowers who qualify for each of
your borrower benefit programs?
Service is another important factor to consider when choosing a lender.
Since the standard repayment period on a loan is 10 years, you
will have a relationship with your lender for at least that length
of time. In addition, many lenders sell their student loans
after they are disbursed or enter repayment. You will then be working
with another organization for the repayment period of your loan.
Since it is your responsibility to repay the loan, you will need
to stay in contact with the servicer of the loan.
Here are some common questions you should ask your lender about
loan servicing:
- Do you sell your student loans? If yes, to
whom?
- If the loan is sold, when will it occur
and how will I be notified?
- Provide the contact information for the
servicer.
- What Web-based services do you provide?
(Online account information, online bill presentment and payment,
credit/bank card payment, etc)
- Will the servicer hold both my Federal and Private Education
Loans? If so, will combined billing be provided?
Peterson's has partnered with many of today's leading providers of federal and private student aid. Visit the following microsite content centers to learn about various loan offerings. You can also apply for loans online when you're ready.
Key Education Resources
American Education
Services
Educaid
Sallie Mae College Answer
Citibank
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