Information on Student Loans

Careful Considerations Regarding Student Loans

Student loans help pay for your educational costs, but remember they must be repaid. You are encouraged to minimize your use of federal and alternative student loans. Federal loans offer lower interest rates and better terms than alternative loans. If you think you need a student loan, please discuss with your Financial Aid Counselor.

So you decide you need a loan, now you need to carefully select a lender. How do you pick from the many lenders who participate in the Federal Family Educational Loan Programs (FFELP) for Federal Stafford (student) and PLUS (graduate and parent) loans?The terms and conditions of these loans programs are set by federal regulations; however borrower benefits and levels of customer service and experience can vary among lenders and should be an important consideration in your choice.

The Community College of Vermont, as a member of the Vermont State College system, annually performs a thorough and independent review of regional and national lenders based on their borrower benefits, customer service to our students and parents, and organizational capability.

• Borrower Benefits: These can include reduced fees when you first take out your loan, and/or reduced fees when you begin repayment by making electronic payments.
• Customer Service: Quality customer service is a very important factor and our suggested lenders strive to provide that service to you. If we hear from our students and parents that any of our suggested lenders are not delivering quality service, we will review that lender’s future inclusion on the list.
• Organizational Capability: The lender’s amount of experience and quality of loan servicing when you are in repayment on your loan were important factors in our review.

Each year we suggest lenders for your consideration based on the factors above. You can, of course, select any FFELP lender, and not just one of the suggested lenders; simply supply the lender name, address and lender ID to our office.

Questions to consider when selecting a lender

There are many student loan lenders available to students (Federal Stafford loans) and parents (Federal PLUS loans). How do you choose? Here are some factors to consider:

• For sure is better than maybe.
  • Whatever fee or interest rate reduction the lender is offering, are you going to definitely get that benefit or only if you do something in particular, such as make a certain number of on-time payments?
  • What percentage of borrowers actually qualify for each of the lender’s benefits?
  • And when you are in repayment, does the lender keep your loan while you are in repayment or sell it to another loan company?

  
  

• Sooner is better than later.
  • When do you receive the benefits? If a lender waives the upfront fees, you receive the full amount of the loan when it is disbursed to the college.
  • If the benefit is when you are in repayment on your loan, how many consecutive, on-time payments do you need to make before receiving the benefit?
  • And what happens to that benefit if you are a few days late with a payment?

  
  

• More is better than less.
  • With all the borrower benefits offered by the lender for which you qualify, how much money would you save if you borrowed $10,000 from that lender?

Other factors. Some students and parents have told us about other factors they consider when selecting a student loan lender:

• Is the lender a for-profit lender or a non-profit (non-profits frequently put funding into non-loan programs to help with college planning and financing). Does the lender’s organization offer other programs that help student and families with going on to college?
• What is the lender’s level of customer service? Does the lender actively contact you when there is a potential problem, or wait to hear from you? Can you easily get information over the phone or on-line?
• How easy is the application process? Does the lender have an on-line master promissory note with electronic signature (“e-sign”)?

We are asked what lender our students choose most often. Historically, this has been the Vermont Student Assistance Corporation, but we encourage you to compare the benefits of all suggested lenders and any others in which you are interested.