La Miraflorina said:
I called up today and it turns out someone had entered my birthday wrong. That's why I couldn't sign on yesterday...
Did anyone else get "randomly" selected to verify their financial aid application? I was selected so now I have to send copies of my tax returns etc... 🙁
Coolraz, would you mind explaining what you were saying about the different lenders? I know nothing about loans or what kinds of questions to ask.
Thanks! 😳
Well the stafford loans will all have the same interest rate: 6.8% (you can thank Mr. Bush for that increase but in the long run this might actually be good).
Where each lender differs is the incentives that they give you. These fall into three categories.
1. fees: usually, stafford loans carry a 3% origination fee and a 1% guarantee fee. A lot of lenders will waive (actually pay the goverment) the 3% fee and some will also pay the 1% fee. This means you get more money upfront. In other workds if you get 100,000 of stafford loans (over the 4 yrs or whatever), you would actually only get 96,000 (cus u'd lose 4% of the fees). If the lender does zero fees, you get the full 100%.
2. interest rate rebates: if you sign up for automatic payments or make a certain number of payments on time, the lender will often reduce your interest rate (usually .25% for automatic payments and up to 3% for consecutive payments). Less interest rate means each year you save that amount on your loan. for example, you get 1% interest break on 100,000k loan. The first year you'd pay aobut 1000$ less in interest. The second year you'd save 1% of your remaining principal which would normally be 90k (since usually you pay over 10yrs, on a 100k loan you'd pay 10k per year) so you'd save 900$. Third year you'd save 800$ and so forth.
Your total savings for 1% intrest rate reduction would be: 5500$
3. principal reduction: other lenders give you a certain percent of the princpal back (can be cash or check). For example, one of them offered 1% principal reduciton on graduation. So, on a 100,000$ loan, you would only be paying off 99,000$. You would thus save 1k at the beginning and then 6.8% of 1k each year. Your total savings with 1% principal reduction over 10 yrs would be: 1000+10(.068)*1000 = 1680.
As you can see all things being equal, your BEST bet is to go with a interest rate reduction rather than a principal reduction (the longer your repayment period, the more the impact of a interest rate reduction is).
Anyway, be sure to call all the lenders and confirm the info they give you on the webiste. Also, if you find the deal that you really like, make sure to get the person's name and tel# who told you about it. That way, if you ever get screwed later (when your loans are disbursed) you can refer back to the conversation. Good luck to all!
