As fall begins, students around the country are heading back to school. Just this week, my sister had her first day in medical school. (Proud, gushing brother) My sister, and many millions of others, are taking on new student loans this year. When you get a new student loan, you can choose your provider, and it is important to do the research to find a good fit for your needs.
How the System Works
When you are going to get a new student loan, you must first complete the FAFSA (Free Application for Federal Student Aid) through your school’s financial aid office. Once your application is reviewed, you will be given an aid package. This can include grants (free money), subsidized loans, and unsubsidized loans.
For the loan portion, you are responsible for finding a bank or other financial institution that offers federal government loans. For my loans when I was in grad school, I used Citi Bank. You can also take a look at other large banks like Wells Fargo or Chase. Each bank offers different discounts, some for using auto-pay and others for building a history of on-time payments.
Eventually, your loan will likely be sold to Sallie Mae, Great Lakes, or another federal student loan servicer. This might mean you send your payments to someone else, but it might not have any noticeable impact on your loan.
Who Should You Choose
At the end of the day, your interest rate is fixed by the government. Currently, that rate is 6.8%. If you can get a discount on that rate by using one lender over another, that should be your first priority.
If you find multiple loan providers with the same offers, which is likely, just pick the one you like best. I prefer a company with a robust online banking system that can sync with Mint.com. That is why I went with Citi. Lucky for me, when my loans were sold to Great Lakes I had the same level of service.
If you have gone through the student loan process, what lender did you choose and why? Were you happy with them or did you regret it? Please share your experiences in the comments.
Image by JohnE777 / flickr