Selecting a Lender

What should I consider in selecting a lender? How do I know which one would be best for me?

Federal Stafford Lenders

We will process your loan using the lender of your choice and a guarantor who will pay the 1% default fee. Although the basic terms and conditions are the same for all lenders participating in the federal Stafford loan program, you should consider the lenders demonstrated record in customer service and their borrower benefits. Most lenders offer borrower benefits as an incentive to select their bank. Some offer front-end benefits and others offer back-end benefits.

A lender that provides front-end benefits may waive the 1% origination fee that is typically paid by the borrower. Or, the lender may reduce the interest rate automatically at repayment.

A lender that provides back-end benefits may reduce the interest rate or principal balance after a certain number of on-time payments.

Some lenders offer an interest rate reduction for Automated Clearing House (ACH) Network payments (automatic withdrawal from a checking or savings account.) Other lenders offer this benefit only if you have a savings or checking deposit account with their particular bank.

Before creating a relationship with a lender who offers back-end benefits, consider the following questions:

  • What steps must I take to qualify for the borrower benefits?
  • Do benefits begin immediately? Or will I have to wait until I have made a certain number of on-time payments?
  • Does the ACH benefit apply regardless of my personal banking choice? Or am I required to open a checking or savings account with the lender to realize this benefit?
  • Is it possible to forfeit this benefit? If so, it is possible to regain this benefit? If so, what are the conditions for rehabilitation?

How are the Stafford lenders on the list the same and how are they different?
Note that the following terms and conditions are subject to change at the lenders discretion.

Bank of America will NOT pay the 1% origination fee on behalf of the borrower. The interest rate will be reduced by 0.25% for any Bank of America savings or checking deposit account customer.

Chase Education Finance will NOT pay the 1% origination fee on behalf of the borrower. Borrowers who elect to have their monthly payments automatically deducted from a bank account will receive a 0.25% interest rate reduction. Note that the interest rate reduction will not lower the monthly payment amount but will reduce the interest that accrues, thereby reducing the total amount repaid. This interest rate reduction begins when the borrower enrolls for and begins having payments automatically deducted by Chase and will remain in effect as long as automatic payments continue without interruption.

Edamerica will NOT pay the 1% origination fee on behalf of the borrower. The interest rate will be reduced by 0.25% for ACH.

Wachovia will NOT pay the 1% origination fee on behalf of the borrower. The interest rate will be reduced by 0.25% for ACH.

Citibank automatically will continue to reduce the interest rate by 0.50% at repayment as long as payments are made on time. If this benefit is lost due to late payment, the borrower can regain the interest rate reduction after making 24 on-time payments. If all payments are made on time, payments for the last six months will be waived. Citibank will reduce the interest rate by 0.25% for ACH.

Federal PLUS Lenders

We will process your loan using the lender of your choice and a guarantor who will pay the 1% default fee. Although the basic terms and conditions are the same for all lenders participating in the federal Parent PLUS loan program, you should consider the lenders demonstrated record in customer service and their borrower benefits. Most lenders will offer incentives referred to as borrower benefits to encourage you to select their bank.

Some lenders will reduce the interest rate or principal amount after a certain number of on-time payments. Other lenders will offer an interest rate reduction for Automated Clearing House (ACH) Network payments (automatic withdrawal from a checking or savings account). During the selection process you should consider the following questions:

  • What steps must I take to qualify for the borrower benefits?
  • Do benefits begin immediately, or will I have to wait until I have made a certain number of on-time payments?
  • Does the ACH benefit apply regardless of my personal banking choice? Or am I required to open a checking or savings account with the lender to realize this benefit?
  • Is it possible to forfeit this benefit? If so, it is possible to regain this benefit? If so, what are the conditions for rehabilitation?

How are these PLUS lenders the same and how are they different?
Note that the following terms and conditions are subject to change at the lenders discretion.

Bank of America will reduce the interest rate 0.25% for ACH for any Bank of America savings or checking deposit account customer.

Chase Education Finance will reduce the interest rate 0.25% at repayment for those borrowers who elect to have their monthly payments automatically deducted from a bank account. Note that the interest rate reduction will not lower the monthly payment amount but will reduce the interest that accrues, thereby reducing the total amount repaid. This interest rate reduction begins when the borrower enrolls for and begins having payments automatically deducted by Chase and will remain in effect as long as automatic payments continue without interruption.

Citibank automatically will continue to reduce the interest rate by 0.50% at repayment as long as payments are made on time. If this benefit is lost due to late payment, the borrower can regain the interest rate reduction after making 24 on-time payments. If all payments are made on time, payments for the last six months will be waived. Citibank will reduce the interest rate by 0.25% for ACH.

Private Alternative Loan Programs

We recommend that you use alternative student loans conservatively as the interest rate will be variable or floating and will not be capped. Depending on the lender that you choose, the interest rate will change every month or every quarter. Each lender uses its own pricing model (1) based on either the LIBOR (London Interbank Offered Rate) or the prime rate (as published in the Wall Street Journal) and (2) typically based on the strength of the credit score and history of the student and/or the cosigner. Interest accrues from the date of disbursement. Interest can be paid while the student is enrolled, or interest can be deferred and capitalized at the time of repayment. We suggest you contact lenders directly to discuss their borrower benefits.

NOTE: Students and parents have the right to select the educational lender of their choice, are not required to use any of the suggested lenders, and will not be pealized for choosing a lender that is not a recommended one.

When Choosing Any Lender

  • Keep in mind that front end benefits are often more advantageous to the borrower than back end benefits.
  • Be wary of unsolicited loan applications or offers to consolidate loans. If you have questions about a lender, please feel free to contact the Office of College Aid and we will be happy to assist you in deciphering the loan materials.
  • Research as many lenders as possible. We will assist you with whatever lender you choose. If you find a lender that offers better incentives than those we have recommended, please tell us. We may want to share this information with other students!
News and Announcements

On Wednesday May 7 2008, President George W. Bush signed legislation that increased the loan limits for undergraduate students. Effective for the 2008-09 school year, students now may borrow an additional $2,000 from the unsubsidized Federal Stafford Loan program. If you want to borrow additional unsubsidized funds based on the new loan limits, please print and complete a new 2008-09 Federal Stafford Loan Instruction and Amount Request Form, add this additional amount to the base amount, indicate the total amount on step two, and be sure to check the unsubsidized box on step three.