Students, know your options before you sign
(usnews.com) As college students and parents scramble to line up educational loans in the last frantic weeks before classes start, many schools are still sending out lists of “preferred lenders” that steer borrowers to unnecessarily expensive loans.
Four months ago, most major lenders agreed to stop making payments to either schools or financial aid officers to win placement on the influential lists. In addition, many schools have agreed to codes of conduct that are supposed to open up the lists to lenders that offer the best deals.
U.S. News found, however, that the lowest-cost lenders are still omitted from many colleges’ lists. That means many borrowers don’t realize they could save hundreds and, in some cases, thousands of dollars by borrowing from a lender not recommended by the school.
Many of the low-cost lenders, for example, will waive the 2.5 percent upfront origination and default fees typically charged students who borrow through the federal Stafford program. That saves students up to $237.50.
And many low-cost lenders are also offering to knock as much as 2.25 percentage points off the federally mandated 6.8 percent ceiling on Stafford loans. (more…)
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