Last year was a bad year for the student loan industry and the colleges that directed students and their parents to the lenders. Whenever a college’s financial aid package does not cover all the costs of the education, whether through loans or grants, students and their parents have to make up the difference through private loans. Where to start? Many have started with their college’s list of preferred lenders.
But, last year it was discovered some of colleges were getting financial incentives, that is, kick backs, to recommend certain lenders. Those lenders were not always the best deal for students and their family.
However, in Emily Green’s article last March in the Wall Street Journal Sunday, she reported that colleges are toughening their conflict of interest policies after last year. Now colleges are looking for lower interest rates, which lenders will give if their repayment rate from that college’s graduates is good. Colleges are beginning to cull out lenders based on their customer service rating, too. Ms Green also pointed out that even the creator of FinAid.org states that a college’s list may help with the needle-in-the-haystack search, admitting that many web sites will give best and worst interest rates but those comparisons are somewhat moot as any rate is individual to a borrower’s credit rating. So what is the best way to seek out a good private college loan?
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