Question: I have a few questions regarding student loans and would appreciate any advice y’all have. For one thing, are there any lenders you do or don’t recommend based on bad personal experiences, etc.? Also, how long was the general turn around time between your applications, approval, and the receipt of funds? Finally, is there anything I should watch out for before I sign away on all the paperwork? Thanks for any tips you guys have! I’m a profro (prospective frosh) and Nancy (at Stanford) volunteered to help answer some questions. I posted this question here because she thought it’d be a good place to get more info on questions she didn’t have answers to beyond what Stanford’s FAO could tell me at this point. SO, if anyone wants to respond, I’m Darcie at Hotmail and y’all can reach me at darc…@hotmail.com. Hope this clears up all the confusion and if I ever use someone else’s computer to post again, I’ll make sure to tack on a note at the bottom. Thanks for all of your advice, though, Raymond! I really appreciate it! :0) I assume you’re referring to Stafford Loans. Colleges that admit you will offer Stafford loans through banks (FFEL – Federal Family Education Loan), or Direct Loans via the government if they participate in that program. If they are Direct Loans there is only one lender – the government.
If they are through banks you are free to pick any bank that participates in FFEL (most do) but most colleges will supply a list of “preferred lenders,” banks with whom they have set up the process – which means it should also be quicker and easier for you. For basic purposes, a Stafford Loan is a Stafford Loan, regardless of lender – they all follow the same rules set by the government.
But some lenders will offer promotions. For example, banks affiliated with the Student Loan Marketing Association (“Sallie Mae”) currently offer 1/4 % interest rate reductions at payback time if you arrange for electronic payments from your checking account, and another 2% reduction after you have made 48 payments on time. Some other lenders promise to refund some or all of your 3% origination fees after so many payments.
All things being equal, I usually suggest picking a Sallie Mae affiliated bank from the “preferred list” for the simplicity of it. Why? Because individual banks buy and sell each others loans (and each other’s banks), and years from now you may not even know who holds your loan (your parents may have experienced this with their mortgage). But once you’re signed on with a Sallie Mae bank, you only deal with Sallie Mae.
As for the turn-around time, it’s usually pretty quick. But you want to submit the Stafford Master Promissory Note (MPN) at least a month before the college will be expecting payment for the first semester. That way the pending disbursement can be credited to your bill. If the college wants payment before they know there is a Stafford in process, they often expect you to pay in full up front, and then they will refund the loan proceeds when received – but that’s often not until October or November and you don’t want to put up money if you don’t have to.
As for what to watch out for before signing – read the documents they provide. The rules of the loans will all be the same because the government says so, but it’s always a good idea to be sure that you understand your legal obligations. I worked with one family where the student took six years to graduate (kept changing majors) and when she finally did graduate she was startled to discover that the lender actually expected her to *repay* the loans she took.
Answer: I assume you’re referring to Stafford Loans. Colleges that admit you will offer Stafford loans through banks (FFEL – Federal Family Education Loan), or Direct Loans via the government if they participate in that program. If they are Direct Loans there is only one lender – the government.
If they are through banks you are free to pick any bank that participates in FFEL (most do) but most colleges will supply a list of “preferred lenders,” banks with whom they have set up the process – which means it should also be quicker and easier for you. For basic purposes, a Stafford Loan is a Stafford Loan, regardless of lender – they all follow the same rules set by the government.
But some lenders will offer promotions. For example, banks affiliated with the Student Loan Marketing Association (“Sallie Mae”) currently offer 1/4 % interest rate reductions at payback time if you arrange for electronic payments from your checking account, and another 2% reduction after you have made 48 payments on time. Some other lenders promise to refund some or all of your 3% origination fees after so many payments.
All things being equal, I usually suggest picking a Sallie Mae affiliated bank from the “preferred list” for the simplicity of it. Why? Because individual banks buy and sell each others loans (and each other’s banks), and years from now you may not even know who holds your loan (your parents may have experienced this with their mortgage). But once you’re signed on with a Sallie Mae bank, you only deal with Sallie Mae.
As for the turn-around time, it’s usually pretty quick. But you want to submit the Stafford Master Promissory Note (MPN) at least a month before the college will be expecting payment for the first semester. That way the pending disbursement can be credited to your bill. If the college wants payment before they know there is a Stafford in process, they often expect you to pay in full up front, and then they will refund the loan proceeds when received – but that’s often not until October or November and you don’t want to put up money if you don’t have to.
As for what to watch out for before signing – read the documents they provide. The rules of the loans will all be the same because the government says so, but it’s always a good idea to be sure that you understand your legal obligations. I worked with one family where the student took six years to graduate (kept changing majors) and when she finally did graduate she was startled to discover that the lender actually expected her to *repay* the loans she took.
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