oin.oor . g
oin.oorHow to Choose a
ati t on
idat t o lida
sololida Student Loan Lender
n ns nsoolid
-loloa n ans s-c
ol e g lelgee-
ol e g
www.c w.c ol
The majority of students now borrow to help finance a college education. The lender that you select now will
typically be the one that you will use throughout your entire college experience. That’s why it’s so important
to get all the facts and choose your lender with care.
The fact is that all lenders are not alike. Now, in addition to banks, some educational associations and other
organizations offer student and parent loans for school. Because these nonbank lenders focus on educational
programs, they often offer some special free programs and services that are very helpful to students. Be sure
to ask your financial aid administrator about these programs.
Choose the lender that’s right for you. When you get down to talking with lenders, don’t be afraid to ask
orgg questions. Carefully compare what each has to offer before you rgg on a lender.
at t on r
ioin. .o . r
alendern are considering:
da Here are some things you’ll want to find out from each at
• Does the lender offer any money-saving benefits? Choose a lender that offers competitive benefits s-c co
a nns-c co
s- a nns-
such as cash back on youre-looa payments are made on time. Compare different lenders to see-looa
gge-l whenin the long run. gee-l
.col most money
which can save you thele
ww.col .col le
• How long ww it take to get your loan? The time it takes to process your application and get you
your loan funds (the turnaround time) varies greatly between lenders. You will want to make sure that
your funds are received by the college in time for you to begin your classes.
• Does the lender sell your student loans? Many lenders sell their loans to other lenders and to the
secondary market so they will have funds to lend to new students. The secondary market includes orga-
nizations that specialize in buying student loans. Selling loans is very common practice in the student
loan industry. When your loans are sold, you will be dealing with a new owner and not the lender who
provided you with the loan. But rest assured, the interest rate and terms of your loan will not change.
Tip: To avoid confusion, choose a lender that sells to only one secondary market—and use that lender for
all your student loans. That way, all your loans will be in the same place.
• Does the lender use a servicer? Some lenders have contracts with student loan servicers. These
r companies take care of all the details—like originating theorgghandling questions from students, and
a at o yourion.
eventually collecting and processing payments. If atiolender uses a servicer, you will communicate with
d olidto notify the servicer if you have a change of permanent
the servicer, and not the lender. Please rememberida
s-c con onns
address or name.
nns - ns-c co
Does the lender capitalize-interest? Capitalization occurs when you have interest accrualegee-lo
• elgee l
ll eg your
.c in-school period for an unsubsidized loan. Generally, lenders will add.the lolle
account during theool
ww.c ww.c interest
that has accrued during the in-school period at the beginning of repayment. Thisww
is called capitalization.
This increases your balance (the amount you owe) and your monthly payments. A lender may choose
to capitalize your interest every three months; every six months; once each year; or just one time, when
Tip: To save big money, choose a lender that offers one-time capitalization at repayment.
oin.oor . g
ati t on
What types of repayment assistance plansdat t the lender offer? Choose a lender that helps you
i does o
sololiincluding graduated repayment and loan consolidation.
manage your money through a variety of options, nsoolid
This will be very important when ns s-c time to repay your loans.
aan ans s-c
lelgee- your monthly payments will begin with a lower amountcollelgee-
ol e g
- Graduated repayment means e g
w.c ol w. ol
income is lowerc will adjust to a higher payment later as your income increases. w.c
www. and ww
- Consolidation allows you to combine loans into one all-inclusive monthly payment, which lowers the
amount of the payment but increases the length of repayment.
• What is the lender’s forbearance (hardship) policy? Some lenders will be willing to lower or defer
your loan payments for a time if you run into trouble repaying your loan. Choose a lender with a flexible
• Will the lender be easy to contact? The last thing you need is a lender who puts you on hold when
you call. Choose a lender with student-friendly services like toll-free telephone numbers and a helpful staff
that answers your questions and provides guidance when you call. Look for lenders that offer 24/7 service
through the Internet.
Remember: You are the customer. Plenty of lenders want your business. Choose the lender who will do the
orgg best job for you. orgg
at t on r
ioin. .o n. .or
da lid at ida
n ns-c co
-loloa ge- -lo
l l ee
loelgge- le g e
o .col le
a at o tioinn.o
aat o ida
s-c con onns
anns- ns-c co
legge - elgee-l
This tipsheet may contain material related to the Federal Title IV student aid program. While the College Board believes that the information contained
herein is accurate and factual, the tipsheet has not been reviewed or approved by the U.S. Department of Education. © 2007 The College Board. All rights
reserved. College Board and the acorn logo are registered trademarks of the College Board. All other products and services may be trademarks of their
respective owners. Visit the College Board on the Web: www.collegeboard.com. Permission is hereby granted to any nonprofit school to reproduce this
tipsheet for distribution to its students, but not for sale, provided that the copyright notice of the College Board appears on all reproduced materials.