After spending most of the afternoon reviewing school lender lists, I have to admit to getting a bit depressed. While my recent "shopping trip" for student loans highlighted the lack of transparency on lender websites (see here and here), it appears that some school sites are no better in helping students make educated and informed decisions about private loans.
Close your eyes for a moment and imagine you are a student. You know that you need a private student loan so you turn to your school's financial aid website. Once you get there, you find the following:
Which banks offer alternative/private loans at University of XYZ for 2009-10?
Lender #1
www.lender1studentloans.com (Click here to apply)
Phone: 800-GET-LOAN
Lender #2
www.lender2studentloans.com (Click here to apply)
Phone: 800-GET-LOAN
Lender #3
www.lender3studentloans/student (Click here to apply)
Phone: 800-GET-LOAN
There you have it; you are about to make one of the most important financial decisions of your life and you are left with a link and a phone number. Good luck!
On the other hand, many schools have worked hard to develop private loan comparison tables with up-to-date interest rate information and details on features of the loans that go beyond regurgitating the marketing-speak that lenders may often provide. These tables can be extremely helpful to students and their parents who are often looking to make the best decision in the shortest time possible. Rather than just provide "As low as..." interest rate information, these schools go the extra mile and update interest rates as Prime or LIBOR indices change. Others provide a guide to assist students in comparing alternative loan options (see SLA's 2009 Private Loan Guide for one example).
Here is a comparison table that can serve as a useful template, created by the University of Phoenix. For those who don't want to go through the hassle of creating a lender list, remember that Student Lending Analytics has recently rolled out its Private Student Loan Ratings, which provides a comprehensive and independent review of leading private loan products (at no cost to schools!).
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Please let me know if you have a lender comparison table that you are proud of and I will be sure to share it with the community in a future post. Thanks!
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