There are several factors you may want to consider when selecting a lender.

1. Does the college or school the student will attend have a preferred lender list?
   Start your search for a lender at the school's financial aid office. Often schools will have a preferred lender list that provides lenders that the school regularly conducts business with.
   
   
2. Does the lender participate in the Stafford and PLUS programs?
   The Stafford and PLUS programs are two federal loan programs that can be the most useful forms of student borrowing. Be sure your lender participates in these programs.
   
   
3. Does the lender offer any discounts, rebates, or interest reduction programs?
   Ask potential lenders or browse their webpages to learn more about these offers that could add up to substantial savings!
   
   
4. Have I already used a specific lender for prior student loans?
   You will make it easier on yourself by borrowing from the same lender. When the time comes to repay your loan, you will then have one payment to one lender.
   
   
5. Does the lender sell its student loans?
   Many lenders sell their loans to secondary markets. Secondary markets may offer additional benefits such as a reduced percentage interest rate after a certain number of on-time payments.
   
   
6. Does the lender have any special programs to help students avoid loan default?
   While it is the primary responsibility of the student borrower to repay any and all loans, certain lenders may do more than others to help you avoid the pitfalls of default.
   
   
7. Does the lender use a servicer?
   While you may be borrowing your money from your lender, you may be paying the money back to a servicer that the lender has hired to take care of the day-to-day management of your loan. Because this is a very common practice, be sure to get a list of all parties involved in the student loan process.
   
   
8. Does the lender participate fully in all of the electronic processes employed in the guarantee of my student loan?
   Most lenders participate in electronic processes like Electronic Funds Transfer to streamline the student loan processes. If your lender does not participate in electronic processes, your lender will probably send your loan via a paper check to your school.

If you have any other questions regarding your lender choice, please feel free to contact us directly at 800.642.5626, extension 36076.

Return to Default Aversion Resources Database