How to Choose A Lender for School Loan

Tips on Choosing a School Loan Lender
Financing your college education can be a very expensive deal if you do not select your lender carefully.  First and foremost you should research a lender's reputation to make sure that loan made to you by them will not become a painful experience during and after collenge.  Many of the basic terms and conditions for federal loans are the same but there are a number of factors you should consider before making your choice:

Customer Service
You should make sure that your college loan lender provides excellent customer service.  A good way to find that out would be by calling their customer service and asking general questions about their loan program.  You can evaluate their customer service based on the quality of responses you will get.  Another thing to see would be how long did you have to wait before you were able to speak to a customer service representative.

Benefits to Borrowers
You should see what kind of front end and back end benefits your lender offers to its borrowers. .

Front-End Benefits
The mandatory front-end fees for Stafford Loans include a 1 percent federal default fee and a 1 percent origination fee and you should get the 98% of the your stafford loan money. Top college lenders will waive these fees on Federal Stafford Loans, allowing you to receive 100 percent of the loan money.  Similarly, the Federal PLUS Loans include a 1 percent federal default fee and a 3 percent origination fee. This means you would receive 96 percent of your PLUS Loan proceeds. Top student lenders waive the 1 percent federal default fee, allowing you 97 percent of the loan proceeds for your educational expenses.

Back-End Benefits
These incentives may include an actual reduction in the interest rate or a rebate applied to the principal loan balance.  Most of the lenders will give you a discount on the interest rate if you agree to a direct withrdrawl from you checking account or if you make certain number of payments on time.  You should inquire about such benefits and discuss their pros and cons.