Choosing a Stafford Loan Lender

This forum made possible through the generous support of SDN members, donors, and sponsors. Thank you.
C

ChristianJames1

Full Member
10+ Year Member
5+ Year Member
15+ Year Member
Joined
Aug 17, 2006
Messages
419
Reaction score
1
I am trying to chose a Stafford loan lender. I have the list narrowed down to lenders who don't charge an origination fee. Looking at the different incentives that each lender offers, I have found 3 predominant types.

1. Lender offers .25% interest rate reduction if you schedule automatic payments or get a checking/savings account with the lender.

2. Lender offers 1% rebate after first payment, 1% rebate after first 12 payments, and 1.5% rebate after first 24 payments.

3. Lender offers to pay 1% default fee.

I have found a lender that offers both 2 and 3, but I am not sure if these outweigh the .25% interest rate reduction. I will most likely be taking out the max amount (4 years of med school). I am pretty clueless with this loan stuff. Any help is really appreciated.

Thanks.
Members don't see this ad.
 
Can you post lenders' names? It's easier to compare.
The one I am leaning with right now is Citi. 0% origination and default, 0.25% back for auto payment, 0.50% back at repayment

I looked at THE, Sallie Mae, Access, Fargo, and some more

Watch also how often and when interest capitalization occurs.
 
plauto said:
Can you post lenders' names? It's easier to compare.
The one I am leaning with right now is Citi. 0% origination and default, 0.25% back for auto payment, 0.50% back at repayment

I looked at THE, Sallie Mae, Access, Fargo, and some more

Watch also how often and when interest capitalization occurs.
Click to expand...

Thanks a lot! Bank of America is offering .25% back with autopayment and a checking/savings account.

Medinvest offers the 1% default credit and the rebates. I hadn't looked at Citi yet since it wasn't one of the preferred lenders for my school.

I'll check them out.
 
Members don't see this ad :)
i just checked Citi and it says there is a 1.5% origination fee. Man, there are so many different fees and incentives it is giving me a headache.
 
yep, you're right. Citi is no good. I guess I am back with Access. I won't be deciding until beginning of June. Check out other thread on here about lenders!
 
I am definitely a novice when it comes to this stuff, but I think Chase may be good--

Benefits:
* No borrower-paid origination fees
* 5.80% interest rate at repayment and for the remainder of the loan term
* Accrued interest capitalized only after uninterrupted periods of grace and deferment
* Standard level repayment or interest-only for the first two years and level repayment thereafter

Interest rate reduction:
* 1.0% reduction at repayment



Anyone find anything better?
 
I went through undergrad taking out unsub Stafford loans but I never knew you could "choose" the lender. Somehow the school just decided for me. So when can you choose your lender. Is this for when you are ready to repay? thanks, sorry for being a little ignorant on this.
 
es888w said:
I went through undergrad taking out unsub Stafford loans but I never knew you could "choose" the lender. Somehow the school just decided for me. So when can you choose your lender. Is this for when you are ready to repay? thanks, sorry for being a little ignorant on this.
Click to expand...

In medical school, you don't get the loans through your school. You choose the lender. The most popular is THE (northstar.org.)
 
ChristianJames1 said:
I am trying to chose a Stafford loan lender. I have the list narrowed down to lenders who don't charge an origination fee. Looking at the different incentives that each lender offers, I have found 3 predominant types.

1. Lender offers .25% interest rate reduction if you schedule automatic payments or get a checking/savings account with the lender.

2. Lender offers 1% rebate after first payment, 1% rebate after first 12 payments, and 1.5% rebate after first 24 payments.

3. Lender offers to pay 1% default fee.

I have found a lender that offers both 2 and 3, but I am not sure if these outweigh the .25% interest rate reduction. I will most likely be taking out the max amount (4 years of med school). I am pretty clueless with this loan stuff. Any help is really appreciated.

Thanks.
Click to expand...

Don't base your decision off of benefits, as these change over time. Most lenders have eliminated benefits due to the current market, but have not updated their websites.
 
Sorry for this "dumb" question, but if you get an alternative loan to cover for expenses not covered by Staffords and PLUS, do you get the amount in a lump sum? I would rather not since I start paying interest rate on the loan amount right away and I only need enough pay rent and expenses as they come due each month. In this financial environment, it does not make sense to take the lump sum and stash it away in a savings account that pays 1% interest, when you have to pay 7-9% on the loan. Thanks for any feedback.
 
es888w said:
Sorry for this "dumb" question, but if you get an alternative loan to cover for expenses not covered by Staffords and PLUS, do you get the amount in a lump sum? I would rather not since I start paying interest rate on the loan amount right away and I only need enough pay rent and expenses as they come due each month. In this financial environment, it does not make sense to take the lump sum and stash it away in a savings account that pays 1% interest, when you have to pay 7-9% on the loan. Thanks for any feedback.
Click to expand...

Yes.

Most loans have 1-2 disbursements, most commonly one each semester.

Talk with your school about getting a Perkins loan. You don't pay interest on this.
 
It might be helpful if we could reference Stafford Loan comparison charts. Here a link to one with a February 28, 2008 compilation date:

http://www.lclark.edu/dept/sfs/objects/StaffordCompChart.pdf

It reports some of the fees and benefits for Access, Chase, Citi, Wachovia, and Wells Fargo. The latter three charge origination fees, which rules them out in my book.
 
[FONT=Verdana, Arial, Helvetica, sans-serif]I had heard that T.H.E. (Total Higher Education) was quite good; however, I just got this from their website ( .[FONT=Verdana, Arial, Helvetica, sans-serif]http://www.northstar.org/):.
[FONT=Verdana, Arial, Helvetica, sans-serif]
Beginning April 1, 2008, T.H.E. will temporarily suspend processing Stafford, PLUS and Grad PLUS applications that have not been approved.

:(
.
 
Members don't see this ad :)
enigma85 said:
I am definitely a novice when it comes to this stuff, but I think Chase may be good--

Benefits:
* No borrower-paid origination fees
* 5.80% interest rate at repayment and for the remainder of the loan term
* Accrued interest capitalized only after uninterrupted periods of grace and deferment
* Standard level repayment or interest-only for the first two years and level repayment thereafter

Interest rate reduction:
* 1.0% reduction at repayment



Anyone find anything better?
Click to expand...

I just check the site and they now have a 0.1% interest rate reduction, not a 1.0%
 
What do these lenders (Chase, THE) have, in terms of benefits, that the school, as a lender, doesn't have? Why don't people just use their school as their lender?
 
DocInProgress said:
What do these lenders (Chase, THE) have, in terms of benefits, that the school, as a lender, doesn't have? Why don't people just use their school as their lender?
Click to expand...

Schools can lend money through the direct loan program but lots (most) schools don't use this program, leaving us to find private lenders to give us money. I've never attended a school with a direct loan program. If you do have a direct loan program, you might be able to choose other lenders anyway.
 
Doctor Bagel said:
Schools can lend money through the direct loan program but lots (most) schools don't use this program, leaving us to find private lenders to give us money. I've never attended a school with a direct loan program. If you do have a direct loan program, you might be able to choose other lenders anyway.
Click to expand...

So is it the most logical choice to just pick the school as a lender if they are lending. My school's lending program is affiliated with SallieMae and the benefit of using the school as a lender would give the needy students more grants.
 
So what's the con of going with chase? I feel like chase is incomparable to every lender. It has no fees and the best interest rate at repayment?

Any other comments?
 
Any lender that doesn't have an origination fee or some other fee to start is good. All lenders will probably not give us our rate reduction by the time repayment begins.
 
Is there any advantage of Bank of America over Chase. Does anyone know of any other lenders that are comparable to Chase?
 
Incentives change over time, but there should be a SINGLE BEST lender for the Fall of 2008. Does anyone think they've found that?

Someone said Chase changed from 1.0 reduction to .1 reduction- but http://www.chasestudentloans.com/medical/med_stafford.htm still shows 1.0 reduction for med Stafford loans. Also, some people have mentioned that incentives will be gone by the time repayment happens, but I don't see how that's possible. If a lender says 1% reduction at repayment, is that not a guaranteed term/condition of the loan? Plus the credit market is the worst it's been in 10+ years right now- I really think it's HIGHLY unlikely it will be worse 4 years from now.

Here's something I've been trying to find out- a government website said in relation to unsub Staff loans that if you don't pay the interest while in school it will capitalize (be added back to the principle) and you'll end up accruing interest-on-interest (compounding interest). If a lender does NOT capitalize the interest until after repayment begins (after school), and instead accrues it straight-line on the original principle only, this could be a BIG benefit over the life of the loan since none of us will probably able to afford interest payments during school (esp. not by years 3-4). It APPEARS that this is what Chase is saying with the line "Accrued interest capitalized only after uninterrupted periods of grace and deferment." What do you think?

PS- it's POSSIBLE that this line refers to sub staff loans only....but since you don't accrue interest during grace/deferment it would be a completely irrelevant sentence.
 
The biggest problem I've found with comparing loan programs is that they don't all list ALL the pertinent information up-front. From my research thus far, here are all the things I'm now trying to compare:

  1. Interest rate reduction at repayment?
  2. Rebates?
  3. Origination/Fed default fees (most=no)?
  4. When does repayment begin (most =6 months)?
  5. Is there a prepayment penalty?
  6. Does int on unsub staff capitalize/compound during school?
  7. Flexible repayment plans (fixed 10yr or up to 25y options)?
Am I missing anything?
 
Sorry for 3 posts in a row, but I just got a response from a lender I was checking out. If you have residency in NC, or attend a school in NC I think this may be the best offer:

http://www.cfnc.org
Is a non-profit NC-only lender offering:
  • 2.5% reduction at repayment
  • No fees
  • No prepayment penalty
  • Flexible repayment
  • Interest not capitalized until repayment
In response to my earlier post on interest capitalization, the response from this lender was: "These are federal loans and is all simple interest, the unpaid accrued interest will be capitalized when you go into repayment."

This seems to contradict http://www.studentaid.ed.gov/PORTALSWebApp/students/english/studentloans.jsp:
"Unlike a subsidized loan, you are responsible for the interest from the time the unsubsidized loan is disbursed until it's paid in full. You can choose to pay the interest or allow it to accrue (accumulate) and be capitalized (that is, added to the principal amount of your loan). Capitalizing the interest will increase the amount you have to repay."

So maybe it's the lender's choice, maybe it's not......
 
I just received this update through Loyola:

Access Group stated they will now charge a 1% origination fee for the Stafford loans. They will also be suspending loan consolidation until further notice. Chase and Edamerica still have no fees for the Stafford loans.
 
kypdurron5 said:
Sorry for 3 posts in a row, but I just got a response from a lender I was checking out. If you have residency in NC, or attend a school in NC I think this may be the best offer:

http://www.cfnc.org
Is a non-profit NC-only lender offering:
  • 2.5% reduction at repayment
  • No fees
  • No prepayment penalty
  • Flexible repayment
  • Interest not capitalized until repayment
In response to my earlier post on interest capitalization, the response from this lender was: "These are federal loans and is all simple interest, the unpaid accrued interest will be capitalized when you go into repayment."

This seems to contradict http://www.studentaid.ed.gov/PORTALSWebApp/students/english/studentloans.jsp:
"Unlike a subsidized loan, you are responsible for the interest from the time the unsubsidized loan is disbursed until it's paid in full. You can choose to pay the interest or allow it to accrue (accumulate) and be capitalized (that is, added to the principal amount of your loan). Capitalizing the interest will increase the amount you have to repay."

So maybe it's the lender's choice, maybe it's not......
Click to expand...


It doesn't contradict. Unsub loans : you accrue but can pay interest while you're in school. It's simple interest. So you don't pay interest on interest accrued while in school. But once you enter repayment, any unpaid interest is added onto your original balance. So now you're paying interest on interest. Interesting isn't it?

BTW, nice find with the NC lender. We need an SDN top 3 lenders with pros/cons thread for the 2008-2009 FA year.
 
kypdurron5 said:
Also, some people have mentioned that incentives will be gone by the time repayment happens, but I don't see how that's possible. If a lender says 1% reduction at repayment, is that not a guaranteed term/condition of the loan?
Click to expand...

Not sure. If the lender incentives are not expressly stated in the MPN (or some formally incorporated addendum to the note), and my impression is that they are not, where is the signed contract with respect to these incentives? No contract, no enforcement.

I beginning to wonder whether the absence of complete written materials from the Stafford lenders isn't a bit shady. Can someone please give me reason for a brighter outlook?
 
Segolene said:
Not sure. If the lender incentives are not expressly stated in the MPN (or some formally incorporated addendum to the note), and my impression is that they are not, where is the signed contract with respect to these incentives? No contract, no enforcement.

I beginning to wonder whether the absence of complete written materials from the Stafford lenders isn't a bit shady. Can someone please give me reason for a brighter outlook?
Click to expand...

That's a point, huh? It's unfortunate because we do rely on these terms when we pick a lender. Honestly, I think we would have a claim if we tried to pursue it against a lender who changed the terms, but no one bothers because it's too much of a hassle. Plus, we're sort of at the mercy of our lenders.

Now, the only lender I know of who has changed the terms is T.H.E., and they did have a line on their website stating that their bonus could be changed based on market conditions.
 
Doctor Bagel said:
That's a point, huh? It's unfortunate because we do rely on these terms when we pick a lender. Honestly, I think we would have a claim if we tried to pursue it against a lender who changed the terms, but no one bothers because it's too much of a hassle. Plus, we're sort of at the mercy of our lenders.

Now, the only lender I know of who has changed the terms is T.H.E., and they did have a line on their website stating that their bonus could be changed based on market conditions.
Click to expand...
I'm not a lawyer, but I've heard the US banking laws summarized succinctly, as follows: The bank wins. If they are changing terms, it's probably because there is language buried in the contracts that allows them to do so.
 
DocInProgress said:
So is it the most logical choice to just pick the school as a lender if they are lending. My school's lending program is affiliated with SallieMae and the benefit of using the school as a lender would give the needy students more grants.
Click to expand...
If you will get extra grants (sounds like a good deal) just for using SallieMae, then do it. But, that sounds kind of fishy to me.

The reason not to use SallieMae is that there are other lenders with better incentives. Simpe as that. That's the point of this thread -- to find the lender with the best incentives.
 
In my notes I have salliemae down as "Nothing bad, nothing good." It doesn't look like they really offer any perks at all.
 
On one of the Stafford-related threads, there was a brief mention of the fed gov't acting as direct lender. Is that option available for med students? Could someone point to a webcite on this?
 
Segolene said:
On one of the Stafford-related threads, there was a brief mention of the fed gov't acting as direct lender. Is that option available for med students? Could someone point to a webcite on this?
Click to expand...

It's only available if your school participates in the direct lending program. My school does not, and as of now, I think most don't. More schools are switching over to the direct loan program because of the recent lending crisis, so if your school doesn't offer it for the upcoming year, maybe they will next year.
 
Ok wow I'm really confused about my loans in general.

At one of my schools, it's fairly straightforward. The Cost of Attendance is about 50,000, and $41,070 of it is covered for me by "Federal Direct Subsidized [and Unsubsidized] Loans [combined]. I assume this is the standard "Federal Stafford Loan" or whatever. The remaining $9,000 is covered by a small university scholarship and a university loan.


At the other school, the COA is just north of $72,000. $40,500 covered with the Stafford Loan, $4,000 with a university grant, and then the remaining $27,951 I'll need a Grad Plus Loan it says. But I also receive a form saying I need to choose a participating FFELP lender to receive my Stafford loan. I have no idea which lenders are "FFELP" lenders, and is this lender necessarily different than whoever I can end up getting for my Grad Plus loan? The paper tells me I should list my previous FFELP lender from undergrad, if I had one. How do I even know this? I know I did have a lot of loans from undergrad, and I just know that I currently have them consolidated so that I pay a company called "American Education Services" every month. I'm very confused about this!
 
ChristianJames1 said:
i just checked Citi and it says there is a 1.5% origination fee. Man, there are so many different fees and incentives it is giving me a headache.
Click to expand...

I just got off the phone with Citi... they told me they have a 3% origination fee. what gives?
 
TMP-SMX said:
FFELP is just the program where you do the FAFSA, pick a lender, and have your federal loans serviced through that lender.
Click to expand...



Still a little confused, I'm sorry. So do I pick one of those four lenders listed on that PDF file posted earlier? (Like Citi, Chase, etc) Basically, what do I write in the blank where they ask me to list the lender I would like? (They don't give any examples/choices).
 
Does anyone have an up to date comparison list of stafford lenders?? Evidently a lot of lenders have changed their policies and incentives within just the last few weeks....
 
everything is changing:scared:
Chase now has a 3% origination fee and a 1% default fee. They haven't updated their website yet

Lys

ETA: Bank of America looks pretty good
-no origination or default fee
-during school, interest accrues monthly, but doesn't capitalize until repayment
-during repayment, interest accrues monthly
 
Miss Alyssa said:
everything is changing:scared:
Chase now has a 3% origination fee and a 1% default fee. They haven't updated their website yet

Lys

ETA: Bank of America looks pretty good
-no origination or default fee
-during school, interest accrues monthly, but doesn't capitalize until repayment
-during repayment, interest accrues monthly
Click to expand...

How do you know that Chase will be charging the fees?
 
Miss Alyssa said:

I called them on Friday to confirm info.
Lys
Click to expand...

I just called Chase and they said that they won't be charging an origination fee on the stafford loans for medical students (Chase pays the origination fee for us). I'm not sure why we're getting different info.
 
Sounds to me like Alyssa got a quote for a Grad PLUS loan, which has a 3% origination fee that Chase does not waive.
Chase does waive all fees for the Staffords, which have a maximum origination fee of 1% for this year, anyway.
 
I just got of the phone with Chase and they told me that as of July 1, 2008 they wil be charing the 1% origination fee on the Federal Stafford and 0-1% default depending on the lender (they said ASA was 0%). I agree, it is very frustrating to try to choose a lender when all of the information is not available or changing very quickly.
 
angelny1 said:
I just got of the phone with Chase and they told me that as of July 1, 2008 they wil be charing the 1% origination fee on the Federal Stafford and 0-1% default depending on the lender (they said ASA was 0%). I agree, it is very frustrating to try to choose a lender when all of the information is not available or changing very quickly.
Click to expand...
No I think you're mistaken. I just called Chase, and the rep said that there are no origination fees from now until June 2009. After June 2009, the policy may change. It also says this on their website.
 
angelny1 said:
I just got of the phone with Chase and they told me that as of July 1, 2008 they wil be charing the 1% origination fee on the Federal Stafford and 0-1% default depending on the lender (they said ASA was 0%). I agree, it is very frustrating to try to choose a lender when all of the information is not available or changing very quickly.
Click to expand...

??? Chase IS the lender. I'm not sure what you are talking about here...
 
You must log in or register to reply here.

Similar threads

E
SDN Article: Reducing Student Loan Payments: Simple Strategies
Replies
0
Views
285
Ernest Atta Adjei
E
S
SDN Article: Student Loan Forgiveness Programs For Healthcare Professionals
Replies
0
Views
1K
Samira Valiyeva
S
S
SDN Article: Public Service Loan Forgiveness Limited Waiver Opportunity
Replies
0
Views
365
SDN Staff
S
1
  • Question
Federal Direct Loan Deadline Question
Replies
0
Views
622
1nygiantsfan
1
Mr.Smile12
Do you know about loan forgiveness? (AMA article)
Replies
0
Views
338
Mr.Smile12
Mr.Smile12
Top