<p>S2 (rising junior) is applying for his first unsubsidized Stafford loan. He went through the pre-application online test/counseling last night (passed...Yippee) and then was directed to a list of college-"recommended" lenders. Of course we know that he is not restricted to that list and had even researched using Discover beforehand. Now I'm wondering what the reall difference is in lenders.</p>
<p>He researched BofA, Chase, Wachovia/Wells Fargo and US Bank on the web. Some have 1% origination fees, some none (?), and Chase indicated that for loans disbursed after June 30, 2009, there would be a .5% origination fee (wondering if other lenders will follow suit). He also looked over some review sights, but the reviews seemed generic.</p>
<p>Is there any substantive difference between Stafford lenders? Can he just go with the lowest fees (they all seem the same). Has anyone experienced differences with the customer service end? And for what reasons would one need to contact customer service once the loan is established? Is there any advantage to using one of the school-recommended lenders? Any advantage to using the lender which also holds his checking/savings account?</p>
<p>There do seem to be some differences in lenders. I’ve seen a number of people on here recommend Discover (no origination fees and no prepayment fees).</p>
<p>Here’s what i have been able to find out:</p>
<p>Discover: good terms (zero/zero) but they take a long time to pay out (somtimes into the mid Fall). So if you cannot front the money, approach with caution.</p>
<p>BofA: A totally chaotic and non-customer-service-oriented company on all levels, and their Stafford processing I have been told is no different. Avoid unless you are a masochist.</p>
<p>I’m planning to do my app in a couple of weeks… have not decided on a lender yet.</p>
<p>Had a lovely chat with S1’s financial aid counselor a couple of days ago…primarily to ask for reinstatement of a grant that didn’t show up on his award letter this year. But while I was on the phone, I asked about Stafford lenders. I was told that the eight companies recommended by the school were chosen because they had a good customer service record (maybe I believe that). He did explain that applying through the recommended lenders would be faster and perhaps easier because it’s all online, but pointed out that quite a few people make separate arrangements and that the school accommodates. He did check and found out that for loans disbursed after July 1, 1009 the origination fee would drop to 1/2%; he also said that all lenders have gone back to charging the 1% default fee. No advantage that anyone knows of for using one’s checking account holder as the Stafford lender.</p>
<p>Son’s bank accounts are with BofA. May use them even with the less-than-favorable customer service review. Chase has the same advantage of being a big bank and same disadvantage of less customer service. Probably have S1 write an app that randomizes the decision process – kinda like rolling the dice.</p>
<p>we used BofA – all online, no issues whatsoever.</p>
<p>Also used Discover for the zero origination fee…</p>
<p>I note that you’re in Connecticut. Is your son’s school in Connecticut too? If so, and if his college uses American Student Assistance (ASA) as a guarantor, the customer service aspect of lender choice may be less of an issue because you may be contacting ASA more often for service issues than you contact the actual lender. In which case, your worries are over.</p>
<p>(I don’t work for ASA or anything, but I work for a college that has used them as a guarantor for ages, and their customer service is top-notch.)</p>
<p>^^May be good to know for S2^^ But S1’s school is in Arizona.</p>
<p>Interesting to note that the customer service record of the guarantor might be more pertinent to the question. Is the guarantor often different from the bank servicing the loan?</p>
<p>Another thought – with all the mergers/acquistions, etc. going on in the banking world, choosing a lender based on potential customer service is not worth the hassle. For example, ASA could get bought out by Sallie Mae next year (just making this up), and overnight, ASA drops to Sallie Mae’s customer service level.</p>
<p>We went with discover for stafford loan. With no fees you get the entire amount. Please check sites because some deduct the fee from your loan amount. We applied May 25th and our approval showed up June 29th. It says funds will be disbursed Aug 18th/Jan 4th to the university.</p>
<p>Stupidly, I didn’t know DD should have done her Stafford loans already. (first in college) Now I’m really worried about time. Does it really take so long to have it processed? We were going to do Discover (on Monday of course) but seeing how long it took the other poster, I’m concerned. They are not on the school’s (Alfred U) list of preferred providers, so I’m not sure how much that will affect time. Are all providers the same for time?
eeek!</p>
<p>You can actually do it today because the app is done online. We haven’t received notification of approval yet but just did ours a week or so ago. The college should still accept it.</p>
<p>@spiffyiscool</p>
<p>Some schools or most schools allow you to file in for something called deferment where you’ve applied for the loans & they are still being processed and they will take the money later since they have certain dates for it to be received.</p>
<p>@forever09</p>
<p>I think you’re confusing ‘deferment’ and ‘disbursement’.</p>
<p>‘Deferment’ has to do with <em>when you pay the money back to the bank</em>. If you have a Stafford Loan as an undergraduate, and then you go on to graduate school, you don’t have to pay on your undergrad Stafford while you’re in grad school. You can get your undergrad Stafford put into an ‘in-school deferment’ status. There are other kinds of deferments, too, some easier to get than others.</p>
<p>‘Disbursement’ refers to <em>when the bank sends the money to the school</em>. The school notifies the lender of the school’s requested disbursement dates. Typically, loan funds for a given semester don’t arrive at the school until shortly before that semester has started, or (as at my school) after the semester’s begun. However, you can (and should) get your loans approved quite a while before the school’s requested disbursement date.</p>
<p>Example: Our school’s fall tuition is due by July 15. Our students are expected to have their loans approved by that date if they want the loans to count towards payment of their fall bill. (If the loans aren’t approved by then, they risk a late fee.) However the disbursement of the fall semester loan is September 29. We do this so that, if the student winds up not attending the school or attending for fewer credits than they intended (and therefore not being eligible for as much loan money as we originally approved), we have time to adjust the loan amounts before the bank sends the money.</p>
<p>We applied online with Discover for both daughter’s Sub and Unsub Stafford loans. Applied 6/6, approved 6/12, just 6 days later. No muss, no fuss.</p>
<p>Zero Orig fee, Zero Default Fee. Disbursement dates to her school (University of Portland) are about a week before the start of each semester. I checked with the school’s financial aid department, and everything is in order.</p>
<p>Discover was not on their recommended list-- each of the lenders on their recommended list had a 1% Orig fee, and a 1% default fee-- I think one even had a 2% Orig fee. And don’t think you only pay the Default Fee if you default-- you pay it regardless, up front (it’s insurance to the lender to cover defaults, I guess).</p>
<p>So I’d recommend Discover.</p>
<p>Yea I think ours took a little longer because they were waiting on loan amount confirmation from our school. I think Discover is quick and funds are disbursed according to when the school sets the date.</p>
<p>Discover paperwork came in mail today. the interest rate was 5.6% with NO fees.</p>
<p>Thank you all so much. Sometimes I feel like a total idiot with all this. She’s the first in the family to go to a 4 year school, and this is all new.
We will go with Discover and apply first thing in the morning (forgot that DD works till 11pm tonight!)
If anyone has any additional advice on any college related topic, please feel free to PM me.
Thanks!!</p>