According to NextStudent, the Phoenix-based premier education funding company, many parents and students may not be aware that they have options when it comes to choosing their lender for such Federal Family Education Loan Program (FFELP) loans as PLUS loans and the unsubsidized and subsidized Stafford Student Loans.
Applicants' student loans will be processed through one of two federal programs, either the FFELP program or the Direct Loan Program (DLP). With the Direct Loan Program, the U.S. Department of Education partners with the student university to fund the student loan, while the FFELP student loan is funded by private lenders.
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Taking Control of Student Loans
Typically colleges will suggest a lender if a borrower has a FFELP student loan, but students and their parents have the liberty to select any lender they choose. It is at the discretion of the borrower to select who funds these student loans for which the borrower is qualified. The Higher Education Act ensures that borrowers retain this right, and guarantees that students will have the ability to pick their lender, regardless of the recommendation of the college financial aid office where they attend.
Since the Department of Education sets the interest rates for all FFELP student loans, lenders who participate in the program are required to charge identical rates. The only difference that varies from lender to lender is in the form of benefits offered to borrowers. These benefits may include: different repayment options, special discounts for on-time payments and electronic payments, and hardship programs that allow borrowers to work with the lender until they become financially stable again.
Comparing Lenders Benefits Borrowers
Once borrowers realize they have the ability to hand-pick their lender, they can further scrutinize those companies that are vying for their business. Further considerations may include top-notch customer service and personalized attention from phone representatives. Since each lender is different, it is up to the borrower to select what is most important to them and thereby provide the greatest long-term benefits and savings over the course of the student loan.
Competitive Incentives Offered by NextStudent
For PLUS loans and Stafford FFELP student loans, NextStudent has many viable incentives and benefits including dedication to outstanding customer service, found in a personally- assigned Education Finance Advisor. This individual serves the borrower throughout the course of the student loan application and funding process. In addition, NextStudent does not require a credit check or collateral in order to qualify for these student loans.
The NextStudent PLUS loan (Parent Loans for Undergraduate Students) and Graduate PLUS student loans consist of many incentives that benefit the borrower. If a student or parent opts to pay via auto-debit, there is a .25 percent rate reduction in interest. Once a borrower demonstrates payment consistency in the form of 48 consecutive on-time payments, a 2 percent interest rate reduction is applied to the account. After only 12 consecutive on-time payments, the borrower earns a 3 percent cash rebate on the remaining principal.
There are several key items found in the NextStudent Premier Stafford student loan package. These include a 2 percent upfront cash rebate and a .375 percent interest rate reduction when the borrower opts to use auto-debit to repay the student loan. In addition, the borrower is given a 3 percent cash rebate on the remaining principal balance once the borrower has made 30 consecutive on-time payments.
When it comes to reviewing lender options, college students and parents who invest the time in reviewing what each lender offers and choose the one that best suits their needs will benefit significantly.
NextStudent believes that getting an education is the best investment you can make, and it is dedicated to helping you pursue your education dreams by making college funding as easy as possible. Learn more about student loans at NextStudent.com.
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