For Students and Parents: Best Practices on Choosing Your Lender
When selecting a student loan provider, students and parents have a
wide range of choices. Colleges and universities frequently develop a
list of preferred lenders based on a careful evaluation of offerings,
quality, price and service. A school's lender list can be a great
starting point when looking for education funding options. It is always
recommended that students and parents also do their own research
regarding student loan lenders. The choice of lender is always up to
you. Listed below are some of the criteria that you can use to select
the lender that best meets your unique needs.
Best value & benefits to borrowers
Does the lender offer to pay fees on the student’s behalf?
Does the lender offer competitive rates and pricing?
Does the lender offer interest rate reductions and rebates?
How easy is it for students to earn and keep rate reductions and rebates?
Does the lender have a minimum income requirement?
Does the lender require repayment while in school?
Customer service investment
Does the lender recommend that students maximize their use of free aid and Federal loans before taking a private loan?
Can students and parents apply for loans online?
Does the lender offer life of loan servicing?
How convenient are the lender’s call center hours?
Does the lender offer Spanish-language support?
Can students access and manage their account online, 24/7?
Robust repayment options
Does the lender provide combined billing for both federal and private loans?
Does the lender provide counseling on deferment and forbearance options?
Are repayment calculators and other online tools available?
Does the lender provide a variety of federal and private loan repayment solutions?
Does the lender offer loan consolidation options?
Does the lender educate borrowers about effective debt management?
Experience & longevity
Is the lender a well-known, reputable company?
What is the lender’s track record in the industry?
Is the company’s focus on student loans?
How many customers have loans with this lender?
Is the lender financially sound and strong?
Choosing the Right Borrower Benefits Program
Many lenders offer benefits programs to their student loan borrowers
as an incentive to maintain a good payment history. Because each program
may be just a bit different, it's sometimes difficult to determine the
best option. Use the information here to help ensure you're asking the
right questions when deciding which Borrower Benefits Program is right
Benefits Offered May Include:
- Reduced interest rate for on-time payments - your interest rate may
be reduced by a certain percentage if you make your payments on time for
a specified period of time, such as 12, 24 or 36 consecutive months.
- Reduced interest rate for direct debit payments - your interest rate
may be reduced by a certain percentage if you have your payment
automatically deducted from your checking or savings account.
- Rebate at time of payoff - you may eligible to receive a rebate of part of your loan balance at the time it's paid in full.
- Rebate or loan credit for on-time payments - you may be eligible to
receive a rebate of part of your loan balance, or a credit applied
against the balance if you make your payments on time for a specified
period of time set by the lender.
- Waived or rebated fees - any applicable fees may be waived or paid
by the lender or guarantor, or may be wholly or partially rebated.
- Rebate or loan credit of fees - any applicable fees may be wholly or
partially rebated, or the same amount applied as a credit to your loan
balance when you enter repayment or other milestone set by your lender.
- Lender makes last payment(s) - your lender may make the last one or
several of your payments on your behalf, based on requirements set by
- Principal reduction - you may qualify to have your balance reduced
by a specified amount, if you meet conditions set by the lender.
Questions to Ask
- What if my payment is late?
- What is considered "late"? One day? Ten days? Other?
- Is there a grace period for late payments which would still let me qualify for the benefit?
- Must my payments be made according to my original payment schedule in order to qualify?
- Can I/How can I regain eligibility for the benefit if I lose it?
- What happens to my benefit if I receive a deferment or forbearance for my loan?
- What if my lender sells my loan(s) to another lender or contracts with a servicer to service my loan(s)?
- Will I be required to sign up for programs at the lending
institution (e.g., e-mail subscription services, electronic
deposit/payments/statements) in order to qualify for the benefit?
- Must my application be "e-signed" in order to receive the benefit?
- What it my account doesn't have sufficient funds to cover payments made by electronic debit?
- How long will the benefit apply? The entire life of the loan or for only a specified period?
- Does the benefit apply to all of my loans or just some of them?
- If I consolidate my loan(s), will the benefit still apply? Is there a different benefit(s) for consolidation loans?
- Is a waiver or payment of fee contingent on the guarantor used?What if I pay off my loan early?
- Can the benefit change or be rescinded at a later point?
- Will I receive a certificate or coupon that must be presented to receive benefits?
- What percentage of borrowers qualifies for and actually receives borrower benefits?
Things to Remember
- Compare all offered benefits to determine the best option for you.
- Be sure to keep all of your student loan paperwork, including
information about your borrower benefits program, in a central,
- Information about borrower benefits may be printed in a brochure
from your lender, and/or may be listed on their Web site. Be sure to
keep dated copies of the applicable information.
- When you finish college and begin repayment, make inquiries about
when the benefits will begin and verify that what you were offered is
what you're receiving.