Financial Aid & Scholarship Department
Division of Student Affairs
Federal School Code: 001153

Lender Selection

For 2009-2010 Loans, you do NOT need to select a lender (Please read the Direct Loan Information).

For 2008-2009 Loans, please read below on how to select a lender.

Choosing a Lender for Your Federal Loan

Before selecting a lender for your Federal Stafford Loan, ask yourself, “What is important to me when choosing a lender?”  Since the federal government sets the interest rates on the subsidized and unsubsidized Federal Stafford Loans, lenders sometimes offer borrowers special “incentives” or discounts to make borrowing from them more appealing.

However, not all incentives are the same. 

Take time to become familiar with the lenders profiled on our school’s lender partner list and closely examine the borrower benefits they offer.  Choose a lender that makes obtaining a student loan easy and affordable.  Choose a lender that looks out for your best interest.  Borrow only what you need and borrow wisely.  Here are some questions to ask when choosing a lender and some things to watch out for:

What upfront fees do I pay on my loan?

Upfront fees are fees you pay when taking out the loan.  These fees are also called origination fees and default fees, and usually range from 0-4% of the loan amount.

Does the lender discount or waive the upfront fees?

Upfront fees are normally deducted from the amount of the education loan before it is disbursed.  This means that borrowers get less than the full amount of the loan they request.  Some lenders discount or waive the origination fee.  Some guarantee agencies also waive the default fee.  When lenders and guarantee agencies waive their upfront fees, borrowers receive the full amount of the loan in their disbursement. 

Who will service my loan?

The “Servicer” is the company that handles your student loan in terms of sending you statements, crediting payments and assisting you when you need help.  Some lenders will have an outside agency service your loan.  Other lenders originate your loan and service it for the “life-of-the-loan.”  You should be concerned about the manner in which your loan is serviced, because you will have a long-term relationship with the servicer during repayment that may last 10 years or more.  If it is important to you to have one point of contact for your loan and to receive consistent, high-quality service, consider choosing a lender that does its own servicing and does not pass your loan off to a third party.

Will my loan ever be SOLD to another lender or servicing organization? 

It is common for lenders to sell student loans to other lenders or servicing companies.  In other words, although you borrow from ABC bank, you may receive a bill from someone else.  Each time your loan servicer changes, you will have new phone numbers, web sites, and bill layouts to contend with and that can often be confusing and inconvenient.  Being transferred to a new loan servicer may alter the convenience and quality of the service you receive.

What incentives or interest rate discounts will I receive when I enter repayment?

This is the hardest area to compare one lender to another.  Borrowers should read the fine print and not be misled by percentages alone.  For example, some lenders may offer borrowers a higher interest rate discount after 48 months of consecutive on-time payments.  This means that if you pay your student loan bill on-time for four years, never once being late for a payment, the lender will give you an interest rate discount after 4 years.  Other lenders may require 24 months of on-time payments to qualify and their discount rate may be a lower percentage.  A better scenario is when the benefit starts with your first payment.  A smaller percentage discount to your interest rate beginning at repayment may save you more in the long run because you begin saving with your first payment.  UPFRONT DISCOUNTS, such as reduced origination fees, are typically the most favorable because your savings are guaranteed and immediate.  Ask your lender what your total savings will be over the life of your loan!

Are there additional discount benefits available?

Many lenders will offer you an interest rate discount when you choose to have your loan payments automatically deducted from a bank account.  However, if you are enrolled in an automatic debit payment program and you do not have sufficient funds available for a given month your loan discount may be taken away from you.

Are there other ways to lose my discounts/borrower benefits?

Typically benefits are lost if the borrower is late for a particular number of days after their scheduled payment date.  The number of days varies by lender.  Ask the lender at how many days late you would lose your benefits.  Some lenders will only allow you to be seven days late in your payment without penalty; other lenders are more lenient and allow you to pay up to 59 days beyond your due date without penalty.  The more time you have to pay the better.  Also, if you choose to consolidate your loans at a late date, you will most likely lose any benefits that were offered when you took out the loan. 

For a list of lenders that have indicated they will provide loans to the students and parents of CSUN, go to http://www.csun.edu/finaid/loans-partners.html. CSUN does not endorse these lenders. You may choose any Federal Family Education Loan Program lender that is willing to make a loan for your attendance at our school. If the lender you would like to use is NOT on this list, DO NOT USE the Student Center to accept your Loan. You must submit a paper 08-09 Loan Activation Request to the Financial Aid & Scholarship Department.

For a list of other lenders that you may choose for your student loan, go to
http://www.edfund.org/pdfs/FFEL_Program_Lenders_Schools.pdf

 

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