Lender Fact Sheets
Factors to Consider When Choosing a Lender
Selecting a lender is an important decision. For many students this will be their first exposure to commercial lending. As with any debt, the student borrower is responsible for repaying the loan — in full — even if the student did not complete school, cannot get a job, or feels that he or she did not receive the educational or other services purchased. Failure to make regular monthly payments could result in a defaulted student loan. So, choosing a lender wisely is an important step in taking out a student loan.
You will want to consider many factors when deciding which lender to use.
- Does the lender offer any discounts, rebates or
interest reduction programs?
Many lenders will. Ask potential lenders or browse their webpages to learn more about these offers. - Does the lender participate in the unsubsidized
Stafford and PLUS programs?
If you are eligible for these programs, be sure to select a lender that participates in the program. - Does the lender hold any prior student loans that
I may have?
If you already have a student loan, it is best to continue borrowing from the same lender. If you borrow from different lenders you will have to send separate payments to each lender. - Does the lender require a credit check?
All parent borrowers must be credit-worthy to borrow PLUS loans. Some lenders also require credit checks for Stafford loan borrowers. - Does the lender sell its student loans?
Many lenders sell their loans to secondary markets. By using the Lender Fact Sheets, you can learn more about the relationships your lender has with secondary markets. - What has been the default experience of a particular lender? While many factors contribute to the default of a student loan, some lenders may have administrative practices that are especially effective in reducing the likelihood of default.
- What level of service can I expect from my lender
or its servicer?
Most lenders employ servicers to answer students' questions and to take care of the day-to-day management of student loans. By using the Lender Fact Sheets, you can learn which servicers a lender uses for its student loans. - 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. - Is a lender a credit union?
Some credit unions require credit union membership, even to borrow student loans.
Please e-mail us with any comments or suggestions regarding this information.