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Author Topic: Loans: Direct from the Fed, or from a bank? Other questions...  (Read 1233 times)

Bizarro Jerry

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I've been "awarded" the standard 20,500 combo of subsidized and unsubsidized loans for my first year.  I'll likely be taking out the full $20,500 (and possibly more through a PLUS loan if needed...that is still to be determined though).

On my school's financial aid website, it says I must accept or decline each of the two loans for the upcoming year.  In accepting, I am to select my lender and that is where I have a question.

The lender options are as follows:

Federal Direct Loans:
---Default Fee:  n/a
---Origination Fee:  2% (less 1.5% after disbursement)
---Total Fees:  0.50%
---Borrower Benefits:  0.25% reduction for auto-debit

AccessGroup:
---Default Fee:  0%
---Origination Fee:  1%
---Total Fees:  1%
---Borrower Benefits:  0.25% reduction for auto-debit

Bank of America:
---Default Fee:  0%
---Origination Fee:  0%
---Total Fees:  0%
---Borrower Benefits:  0.25% reduction for BofA customers

CoreFirst:
---Default Fee:  0%
---Origination Fee:  1%
---Total Fees:  1%
---Borrower Benefits:  0.25% reduction for auto-debit

US Bank:
---Default Fee:  0%
---Origination Fee:  0%
---Total Fees:  0%
---Borrower Benefits:  1% credit of original principal after 12 consecutive on-time payments

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We are allowed to use other lenders if we chose, but these are the ones listed so I figured I might as well start with these.

My understanding is that Stafford (whether subsidized or not) are all at a fixed rate of X percent and that rate won't vary among lenders... only with the reductions for things like auto-debit, etc...

So my question is this:  Why would anyone pick any lender other than USBank or Bank of America, given these choices?!?  Isn't it clear that these two offer the best deals, making the coice simple?

I thought the easiest and most cost-effective loan would be straight through the fed (via the first option listed) but that seems to not be the case with their various fees. 

If someone could clear this up, I'd be very grateful.  Thanks!



cubbos

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Re: Loans: Direct from the Fed, or from a bank? Other questions...
« Reply #1 on: April 18, 2008, 02:53:35 PM »
Yes those are the obvious choices in that grouping.  However, you have to remember that a lot of students don't both and just pick whatever name they are familiar with.  Looking at your options will save you thousands, and the ones that you have listed are just the beginning.  If you go to FinAid.org there is a huge list of lenders that offer benefits to reduce the %s.  Things have gotten worse in terms of reductions this year but there are still a few that offer better deals that you should look into.  I'm currently doing that now...

Good luck!
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hbb

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Re: Loans: Direct from the Fed, or from a bank? Other questions...
« Reply #2 on: April 20, 2008, 12:23:28 PM »
Currently, only loans made through the Direct lending program are eligible for the new federal IBR/LRAP programs. Federal loans made through private lenders would need to be consolidated into the Direct lending program to take advantage of these benefits... this may impact your choices if you plan on taking advantage of the IBR/LRAP program.



just ducky

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Re: Loans: Direct from the Fed, or from a bank? Other questions...
« Reply #3 on: April 21, 2008, 02:05:29 PM »
Yes those are the obvious choices in that grouping.  However, you have to remember that a lot of students don't both and just pick whatever name they are familiar with.  Looking at your options will save you thousands, and the ones that you have listed are just the beginning.  If you go to FinAid.org there is a huge list of lenders that offer benefits to reduce the %s.  Things have gotten worse in terms of reductions this year but there are still a few that offer better deals that you should look into.  I'm currently doing that now...

Good luck!


Would you mind posting which lenders you found to have good deals?  TIA.
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