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# Best Student Loan Provider?

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VP
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25 Apr 2009, 14:06
1
KUDOS
Guys,

I don't know if you've done much searching for a student loan provider, but there are some big differences and you can save a decent amount of money if you go with one that has low fees.

The best one I've seen so far is from Discover Student Loans....

Quote:
Federal Stafford Loans
Interest Rate - 6.8% fixed
Interest Credit - 0.25% repayment interest rate credit when payments are set up for automatic debit from a bank account
Zero origination fees
Zero guarantor fees
Zero prepayment fees

Interest Rate - 8.25% fixed
Interest Credit - 0.25% repayment interest rate credit when payments are set up for automatic debit from a bank account
3% origination fee*
Zero guarantor fees
Zero prepayment fees
(*There are zero guarantor fees and zero prepayment fees, but the government requires that we charge a 3% origination fee on Federal Grad PLUS loans.)

Certified Private Loans
Interest Rate - Variable, from Prime minus 0.50% to Prime plus 4.75%, based on credit evaluation
Interest Credit - 0.25% repayment interest rate credit when payments are set up for automatic debit from a bank account
Zero origination fees
Zero guarantor fees
Zero prepayment fees

Considering my current bank (BoA) had origination fees (1% on Stafford = \$200) and guarantor fees on the Stafford Loans, this is a big step up.

If anyone has found anything better, please post!!

RF
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Re: Best Student Loan Provider? [#permalink]

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26 Apr 2009, 16:25
1
KUDOS
I would check with your financial aid office to make sure this is actually true.

There is a federally mandated default fee of 1% on all Stafford loans, so it's technically not a fee charged by the lender (hence "zero fees"). However, some states' loan guarantee agencies will pay a portion or all of that default fee. For instance, loans disbursed to finance attendance at a school in New York State will be guaranteed by the HESC and a 1% default fee applies always. The Illinois agency ISAC pays between 0.25% to 1.00% of the fee on loans disbursed to finance attendance at a school located in Illinois. Ditto for GradPLUS loans. Some states subsidize the 3% origination and default fee(s) on FFELP GradPLUS loans, others don't.

I'm not sure how it works in other states. I've only ever been to school in New York and Illinois.

That said, if there truly isn't a default fee associated with the Stafford loans that Discover is offering, then it's a great deal and an easy way to put a couple of extra C-notes in your wallet.
VP
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Re: Best Student Loan Provider? [#permalink]

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26 Apr 2009, 17:44
Thanks Solaris, that's the kind of inside info I'm looking for.

The whole student loan thing is a bit of a mystery to me!

RF
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Re: Best Student Loan Provider? [#permalink]

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26 Apr 2009, 19:50
Also, somewhat related is the FAFSA discussion that got started a little while ago:
fafsa-strategies-75251.html
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VP
Joined: 28 Feb 2008
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Schools: Tuck
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Re: Best Student Loan Provider? [#permalink]

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29 Apr 2009, 11:14
1
KUDOS
Here is a nice set of charts where you can compare what the different lenders are offering in terms of incentives...

Stafford Loans
PLUS Loans

RF
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Re: Best Student Loan Provider? [#permalink]

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29 Apr 2009, 11:25
solaris1 wrote:
That said, if there truly isn't a default fee associated with the Stafford loans that Discover is offering, then it's a great deal and an easy way to put a couple of extra C-notes in your wallet.

Solaris,

From this website, it doesn't appear that waiving the default fee is that uncommon....

Quote:
http://www.finaid.org/loans/studentloandiscounts.phtml
The most common loan discounts include a 0.25% interest rate reduction for having your monthly loan payments direct debited from your bank account (and also often requiring online electronic statement delivery). Many lenders also waive the origination fees on Stafford Loans. Depending on the guarantor, they may also waive the 1% default fee (previously "guarantee fee").

RF
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Re: Best Student Loan Provider? [#permalink]

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29 Apr 2009, 18:11
refurb, that is what I said in my previous post - some states guarantor agencies might waive the default and subsidize the origination fees on federal student loans. I am however not certain whether this is the exception or the norm, and it certainly varies state by state.

Since you will be going to Tuck, I would investigate whether New Hampshire has a state-run agency that guarantees federal student loans against default and how it treats federally mandated fees.
VP
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Re: Best Student Loan Provider? [#permalink]

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30 Apr 2009, 03:37
solaris1 wrote:
refurb, that is what I said in my previous post - some states guarantor agencies might waive the default and subsidize the origination fees on federal student loans. I am however not certain whether this is the exception or the norm, and it certainly varies state by state.

Since you will be going to Tuck, I would investigate whether New Hampshire has a state-run agency that guarantees federal student loans against default and how it treats federally mandated fees.

Alright, I need to do more digging.

The reason for my post is that a lot of these companies that waive the default fee don't appear to involve state agencies. It would appear a lot of the national lenders just waive the fee.

RF
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Re: Best Student Loan Provider? [#permalink]

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30 Apr 2009, 05:08
RF - even if you borrow from a lender not associated with a state agency, the loan is guaranteed by the government. So it's up to the government agency making that guarantee whether they'll waive the fee.

Also, it doesn't look like the table is 100% accurate. In the Stafford loan table for example it says Discover is offering a 2% principal reduction at graduation, but when you click thru to Discover's site you see that the 2% reduction is only for their private loans, not the Stafford or GradPLUS loans. Several of the lenders for whom the table shows principal reductions available, I couldn't find any mention of it on the lender's website.
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Re: Best Student Loan Provider? [#permalink]

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30 Apr 2009, 05:30
Jerz wrote:
RF - even if you borrow from a lender not associated with a state agency, the loan is guaranteed by the government. So it's up to the government agency making that guarantee whether they'll waive the fee.

What would stop the lender from covering the fee themselves?

Quote:
Also, it doesn't look like the table is 100% accurate. In the Stafford loan table for example it says Discover is offering a 2% principal reduction at graduation, but when you click thru to Discover's site you see that the 2% reduction is only for their private loans, not the Stafford or GradPLUS loans. Several of the lenders for whom the table shows principal reductions available, I couldn't find any mention of it on the lender's website.

Yeah, the table might not be up to date. At least it's a starting point.

RF
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Re: Best Student Loan Provider? [#permalink]

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12 May 2009, 13:21
I'm surprised this topic isn't more active! Have all you guys already figured out your lenders?

Anyways, I talked to the Tuck Financial Aid office and I learned the following:

- Tuck has a list of guarantor agencies that it prefers to work with based on customer service and borrower benefits
- Some of these guarantor agencies will waive some or all of the guarantor fee.
- Some of the lenders will waive some or all of the guarantor fee.
- You can chose both your guarantor agency and your lender if you want.

RF
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Re: Best Student Loan Provider? [#permalink]

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13 May 2009, 08:02
refurb, there appear to be multiple threads on student loans.
Also see http://gmatclub.com/forum/financing-your-mba-41568-80.html#p590508 for a bit more discussion on private student loans, specifically.

This is the first I have ever heard of borrowers choosing the guarantor agency they want to work with. My understanding was that this was typically a function of your state residency or the location of your school. However, I am happy to defer to Tuck Financial Aid on this. Please post more information if you can.

Again, as far as figuring out lenders is concerned - it makes no difference who you choose to borrow from (as far Stafford/PLUS loans are concerned) because virtually every bank out there offers the same fixed rate and auto-debit incentive. The equation changes a bit with the origination and guarantee fees however, and working with a guarantor who will waive all or part of these origination and guarantee fees will make the Stafford/PLUS loans a bit cheaper.

I do know however that at my school I will need to work with New York State's HESC and pay origination and guarantee fees ranging from 1.0% to 4.0% depending upon the loan type.

refurb wrote:
I'm surprised this topic isn't more active! Have all you guys already figured out your lenders?

Anyways, I talked to the Tuck Financial Aid office and I learned the following:

- Tuck has a list of guarantor agencies that it prefers to work with based on customer service and borrower benefits
- Some of these guarantor agencies will waive some or all of the guarantor fee.
- Some of the lenders will waive some or all of the guarantor fee.
- You can chose both your guarantor agency and your lender if you want.

RF
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Re: Best Student Loan Provider? [#permalink]

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13 May 2009, 11:56
solaris1 wrote:
I do know however that at my school I will need to work with New York State's HESC and pay origination and guarantee fees ranging from 1.0% to 4.0% depending upon the loan type.

Solaris, I did see that other thread, but it hasn't been that active lately. Tuck wants all the student aid paperwork done this month, maybe other schools don't have such early deadlines? Either way I want to have all this worked out in the next couple weeks.

Interesting how you have to use NY state's guarantor agency!

I actually sent Discover Student Loans an email asking for clarification on their "zero" default fee. We'll see what they say.

RF
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Re: Best Student Loan Provider? [#permalink]

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23 May 2009, 14:08
1
KUDOS
Hey guys, I found a blog about student loans, lots of good info there.

Student Lending Analytics Blog

Including this important info!!!

Quote:
May 20, 2009

I saw this announcement sent out to schools today from Discover:
We are adjusting the interest rate margins for our new Certified Private Loans. This change is effective for applications received on or after June 1, 2009. The new interest rates will range from Prime Index + 1.00% to Prime Index + 7.75%.

We wanted to notify you in advance and assure you that this change affects only new applications and not existing loans or applications in process. We are not changing our commitment to schools or our efforts to promote responsible borrowing. And we continue to offer the same borrower benefits on all Certified Private Loans:

* Zero fees
* 0.25% Auto Debit Reward

The old rates were Prime - 0.50% to Prime + 4.75%!!

RF
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Re: Best Student Loan Provider? [#permalink]

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23 May 2009, 14:23
2
KUDOS
Here is some great info on private student loans...

Student Lending Analytics Blog

RF
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Re: Best Student Loan Provider? [#permalink]

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09 Jun 2009, 07:05
Just wanted to chime in here that refurb is right, we can choose to work with any lender we want and different lenders will use different guarantors. So, for instance Discover's guarantor Great Lakes will indeed waive the 1% federal default fee on Stafford and GradPLUS loans (by paying it directly) so Discover is (on paper) a great lender to go with for Stafford and GradPLUS loans because of the 1% savings in fees. It doesn't seem possible to actually "choose" a guarantor however.

Also, Texas and Connecticut (among other states possibly) seem to have their own fixed rate education loans that are cheaper than the GradPLUS for state residents. People might want to check those out too and is if they are eligible.

Texas: http://www.hhloans.com/borrowers/calfactsheet.cfm

Further info from SLA Blog, which refurb linked elsewhere: http://www.studentlendinganalytics.com/images/SLA-2009-Private-Loan-Guide.pdf
Re: Best Student Loan Provider?   [#permalink] 09 Jun 2009, 07:05
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