Choosing the Right Lender

The choice is yours! If you plan to use student loans to help finance your college education, make sure you know your rights as a borrower when working with your school's financial aid office.

• You have the right to choose your lender and are NOT required to use a school's "preferred lender list."

• Be informed and know which providers have the best interest rates, borrower benefits during repayment, and customer service. The MDHE's newly enhanced lender list can help you.

  • Some lenders subsidize (pay on your behalf) the up-front fees - the Federal Default Fee (FDF) of 1% and the Origination Fee (OFee) of 1.5%. For a freshman-level Stafford Loan an FDF subsidy will save you about $35 while an OFee subsidy amounts to about $52 in savings.

  • Many lenders offer a lower interest rate to borrowers who have payments automatically withdrawn from their bank account or who make a certain number of on-time payments.

  • Investigate whether a lender offers discounts or forgiveness plans for your particular field of study.
    
    
  • Many Missouri lenders are associated with MOHELA, Missouri's designated secondary market and student loan servicer. MOHELA offers the most generous repayment benefit package in the country, with deep discounts on interest rates. MOHELA-MDHE borrowers may receive an interest rate up to 3 full percentage points less than the federal interest rate. For an average undergraduate borrower, that translates into a possible savings of more than $5,000 in interest over the life of the loan.
    
    
  • Carefully consider your options and select your lender wisely. Additionally, if you need assistance calculating the actual long-term differences in lenders' various fee discounts and other benefits, there are calculators available to assist, such as the Loan Discount Analyzer on finaid.org.

    Note: You may also review the entire national lender list from the U.S. Department of Education
    

• To make your repayment process as smooth as possible, borrow from the same lender and within the same loan program every year you need a student loan. If you borrow from multiple lenders or programs, you will have to make multiple student loan payments each month. If you transfer schools, request your prior lender from your new school's financial aid office.

QUICK TIP:  Schools are required to work with ALL eligible lenders. If your school won't certify a loan not on its preferred lender list, contact the Education Department's Federal Student Aid Ombudsman toll-free at 877-557-2575.

Have you already borrowed a student loan, but don't know who your lender is? Let the MDHE help you: Find my Lender!