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 if you are attending a school participating in the FFEL Program, and you are not required to use a school's "preferred lender list." You can also request from your school's financial aid office the reasons the lenders on a preferred list were selected.

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

  • Some lenders and/or their servicers subsidize (pay on your behalf) the up-front fees such as the 0.5% Origination Fee (OFee). For a 2009-2010 freshman-level subsidized Stafford Loan, an OFee subsidy amounts to about $17.50 in savings. Remember: The MDHE is subsidizing the 1% Federal Default Fee (FDF) through June 30, 2010 when you select the MDHE as your FFELP guarantor.

  • Some lenders may offer a lower interest rate to borrowers who have payments automatically withdrawn from their bank account or who make a certain number of on-time payments.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 programs.
    
    
  • Many Missouri lenders are associated with MOHELA, Missouri's designated secondary market and student loan servicer. Historically, MOHELA has offered one of the most generous repayment benefit packages in the country, including periodic loan forgiveness programs.
    
    
  • 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 lenders using the same servicer and within the same loan program every year you need a student loan. If you borrow from multiple sevicers/lenders or programs, you may have to make multiple student loan payments each month. If you transfer schools, request from your new school's financial aid office that any new loans be made with a lender using your prior servicer.

Having trouble finding a lender? Check out Missouri's Lender of Last Resort program.

QUICK TIP: Schools are required to work with ALL eligible lenders. If your school won't certify a loan for a lender that is 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!