There are a lot of student loan lenders. Sorting through who’s who can be more difficult than you might think. For example, some banks that offer private student loans only supply the funding for the loans while a third-party structures their program. In other cases, what looks like two different lenders is actually the same lender operating under two different brands. In still other cases what may appear to be a lender is, in reality, a company marketing student loans on behalf of lender partners. In fact, that’s what we do here at eStudentLoan. We’re not a student loan lender. Rather, we market student loans on behalf of our lender and marketing partners.
So, how can you tell who is a lender and who is a marketer? What student loan lender should you choose? Does it matter how you find a student loan?
The good news is that you don’t have to worry too much about the source of your student loan. First, all of the federal student loans you may borrow are made by the Department of Education. For most students, Direct Stafford and Direct Parent PLUS or Direct Direct Grad PLUS loans will represent the largest source of funding. When financial aid, scholarships, work and federal student loans aren’t enough to cover costs, some students may consider private student loans. And, that’s where confusion can come into play.
It’s important to very carefully compare your private student loan options to ensure you get a loan that meets your needs. Factors to consider are:
- How much may I borrow?
- Who will I use for a co-signer (most students need one)?
- Should I go with a variable or fixed rate loan if given the choice?
- How much will I be charged in loan fees?
- How is interest calculated?
- How long will I have to repay?
- Is there a grace period after I graduate in which no payment is required?
- When do I have to begin making payments?
- What happens if I have trouble repaying at some point? Does the lender offer any help like a temporary postponement of repayment (forbearance)?
- Are there any incentives for repaying my loan on-time?
- Can my co-signer be released from their obligation after I make a number of on-time payments?
On top of it all, your co-signer’s and your credit will play a critical role in determining the interest rate for your loan. Most students will require a co-signer in order to get a private student loan and the lender you choose will base the majority of their decision to lend to you and how much they charge in interest on the creditworthiness of your co-signer.
As you can see, there are a lot of questions you need to get answers to in order to do the kind of comparison necessary to make an informed borrowing decision. Don’t be overwhelmed. You’ll learn a lot just by answering those questions.
When it comes to choosing your student loan lender, you actually have a fair number of options. A good place to start your search is by using our LoanFinder. Once you complete our short form, you will be shown side-by-side comparison of some of the top student loan lenders.