Choosing a Lender
- MNU Student Loan Code of Conduct (PDF coming soon)
- What To Look For
What to look for
We developed a Lender Comparison Chart to give our student borrowers a place to begin their process of selecting a lender. All MNU students are advised to research various loan programs for themselves and the benefits associated with them, including lenders not appearing on our chart. MNU Students may borrow through any lender that participates in the Federal Family Education Loans Program (FFELP).
Lenders on our comparison chart were chosen based on research completed by MNU Student Financial Services staff members. Several of these lenders have been providing quality loan products and services to our students for many years. Factors MNU considered when creating this chart were:
- Loan programs with low fees (Stafford) and good customer service
- Lenders who are stable and have a long, successful track record in student lending
- Excellent default prevention programs and low rates of default claims
- Dedication to Debt Management training
- Easy to use on line processes, including comprehensive account management tools
- Quality repayment benefits
Key Points to understanding repayment incentives:
Loan Fees: Some lenders will pay some or all of the fees normally charged to the borrower. This type of benefit tends to save our students the most money because the benefit is immediate and doesn’t have to be earned in some way.
Principal Reductions: Some lenders offer to refund a percentage of your outstanding student loan balance either at the start of repayment or at designated times of repayment, such as 36 months or 48 months. Historically the number of borrowers who earn this type of benefit is low. Benefits like this will be voided if the borrower consolidates loans or if the loan is paid off prior to the benefit becoming effective.
Interest Rate Reductions for Repayment: Some lenders choose to charge a lower interest rate at the start of repayment or at designated milestones of repayment, such as 36 months or 48 months. The shorter the timeframe for earning the benefit, the more money it will save the borrower. Keep in mind that payments must be paid on-time in order to keep the lower rate and, if you consolidate, the lower rate will not transfer.
Interest Rate Reductions for using Automatic Payments: Some lenders will reduce the interest rate if you elect to repay your loan through pre-scheduled automatic bank debits. The reduced rate doesn’t apply to in-school periods or while payments are in a deferment/forbearance status. This is a great way to save money as long as you don’t consolidate.
Forgiveness of Final Loan Payments: Some lenders will waive your final few payments and consider your loan paid in full. This benefit is not very common, and typically does not cover more than the last few payments. This particular benefit is extremely hard to earn. However, if you make larger than minimum payments, even if they are on-time, you will not qualify for this benefit. Consolidation will terminate this benefit as well.
Tips from your financial aid loan officer:
MNU loan officers would like to emphasize the importance of doing homework on your lender of choice. Many consumers will compare product and price between retailers in order to pay the best price for the best quality product they can afford. You should do exactly the same thing when borrowing a student loan. Most loans represent a long term commitment, so you want to choose a lender who will not only offer a fair deal, but who will also work with you as you repay your student loans. Keep in mind that all lenders’ marketing is designed to emphasize their strong points. When creative advertisements draw your attention, remember that appeal doesn’t guarantee this lender will be right for you.
MNU recommends you consider doing the following as part of your research:
- Call and email prospective lenders and ask for the following information:
- What fees will you deduct from or add to my loan?
- What benefits during repayment can you offer me to lower the cost of my loan?
- How do I qualify for the benefit? How are your benefits lost? If lost, can they be restored later through qualification?
- How much money can I expect to save if I borrow $20,000 and qualify for your benefits?
- Write down each lender’s answers and describe how you were treated. Review your research to select the lender that you think fits you best.
Remember, the details contained in the fine print are what you need to pay attention to the most. These are the “nuts and bolts” that hold the framework of your loan together. The flashy banners and large print slogans are what catch your attention, but don’t base your decision on that alone. Paying off your loans early by making larger-than-required payments is still the best and most reliable method for saving the most money.
