Student Loan Consolidation - Nonprofit Groups

[lvScRb23]

One item generally not covered in the media is the differentiation between for-profits and state designated non-profit student lenders. Nonprofit lenders such as Student Lending Works (www.studentlendingworks.org) in Ohio, Indiana Secondary Market (www.ismloans.org) and MHESAC (www.mhesac.org) in Montana are crucial to the student loan consolidation program.
• They often operate with tax exempt funding that allows them to offer lower rates and better discounts on student consolidation loans.
• They help keep rates low across the board by forcing the for-profit lenders to offer low rates in order to compete. This ultimately helps save borrowers money – not shareholders.
• Many for-profit lenders have goals of generating shareholder returns, while non-profits' goals are to give back to their states and benefit the public.

Many borrowers still view some of the larger lending companies like Sallie Mae or Nelnet as government entities, and in many cases this just isn't so. They also believe they are receiving "permanent" benefits that don't turn out to be as permanent as they had expected.

List of state-designated nonprofits

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[okbye]

Indiana Secondary Market was our primary lender up until about 2 months ago, they are a good company. We switched because we found another company offering better deals and the ability to negotiate interest rates, not because we were unhappy with them. They have good customer service and for the amount of loans we ran through them very few screw ups.
I wouldn't give being non-profit that much credit though, they may not have shareholders but their execs want to be paid just like any other ones. No one is in this business to primarily help people, they do it for the money. ISM has tried to snipe clients from us just like any other lender. We have had our clients call us saying that ISM was trying to get them to do things we had advised them against, most recently we had done a consolidation and excluded a Perkins loan because the student was eligible for forgiveness. They saw a loan not included in the consolidation and tried to talk them into reconsolidating to include it. That would not have benefitted the student, only ISM. That's not particularly unusual for a lender, just be aware that you have to be the one who looks out for you, don't assume your lender is.

Sallie Mae was indeed the government's department for issuing student loans in the past, I think that's why a lot of people still think they are. They became a regular private company about 10 years ago and the DOE started Direct loans. Direct is the only government lender, no other comapny has anything to do with the government except we have to follow their rules. It is a federal program, but the individual company has no affiliation with the gofernment.

 

[martin73]

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