Choosing your Lender and Completing Your Master Promissory Note (MPN)

Choosing your lender is one of the most important decisions you will make when taking out student loans -- after all, you will have a relationship with this lender for the next ten to thirty years! Many Rush students have never had to choose a lender for their educational loans before. We hope the information presented below is helpful as you look to make this decision. Please contact our office with questions or concerns, but remember that we cannot make this decision for you.

You are free to choose any lender that you would like to use for your educational loans. Our office will not refuse to certify your loans based upon your choice. The information provided below is for your benefit, and is not meant to restrict your choices in any way.

Rush is NOT a Direct lending school. Students who have borrowed a Direct loan through the US Department of Education in the past must select a new lender at Rush.

Choosing a lender?! Where do I even begin?

Start by asking yourself this question: Have I ever borrowed an educational loan before?

• If you've borrowed an educational loan from another institution, would you like to continue to borrow from that lender while at Rush?
  
  That might sound like a simple question, but you should ask yourself whether you are happy with the level of customer service you've received from that lender. You also want to consider what that lender is offering in the way of repayment incentives for new loans during 2008-09. It could be that you could save money by choosing a different lender. Contact your lender before making this decision to find out how they compare to what else is available.
  
• If you are interested in changing lenders, or if you've never borrowed before, get ready for your first homework assignment!
  
  This really is not meant to be a painful process. Really! But choosing your lender is serious business. In addition to the relationship you'll have with this lender for the next several decades, you may also be borrowing large sums of money to complete your education. You want to be sure you are getting the best deal and the best customer service available. What is right for one student is not right for all students. The Rush University Office of Student Financial Aid is here to make the financial aid application process as seamless as possible, but we are not here to make this decision for you.

I'm ready to choose my lender. What now?

You are free to choose any lender that you wish to use for your educational loans (Rush is not a Direct lending school, so students cannot choose to borrow a Direct Stafford loan). Please note that the Federal loan terms are the same no matter which lender you choose. You'll find a difference in what each lender is willing to offer when it comes to cost savings for you, the borrower.

While we cannot make the decision for you, the Office of Student Financial Aid does recognize that you may need assistance in starting your search. In December 2007, our office initiated a request for information (RFI) from approximately fifteen different educational loan lenders that have contacted our office in the past. Our request asked for detailed information regarding loan terms, repayment incentives, cost breakdowns, and lender contact information. We narrowed the responses down using the following criteria:

1. Zero Origination/Default Fees (Stafford Loans) - Lenders that charge an origination or default fee on their federal loan offerings were immediately excluded from consideration (with one exception for a lender that charges the fee, but provides a credit of that fee on the back-end of the loan). Some lenders have chosen to waive those fees for their borrowers, and our office feels that this is incredibly important (especially for graduate/professional students who are looking to borrow significant amounts of money). When a fee is charged, it is deducted from the amount of of the loan -- that means there is less money to pay tuition charges and living expenses each quarter. Typically, students still have to repay the fee, even though they did not see any benefit from those funds. Please note that Grad PLUS Loans have a 3% mandatory fee that lenders must charge, by law.
   
2. Attainable Benefits - Some borrower repayment incentives are so complicated that it's a wonder any student finds a way to qualify for them! We believe that real, reliable, attainable benefits are what will save our students money.
   
3. Level of Customer Service/Reputation - If it is difficult for your financial aid counselor to get a problem with your student loans resolved, imagine what it will be like for you when you are working full-time as a health professional! Superior customer service is key when borrowing money. You also want to be sure your lender will be around to see you repay your loans. Lenders with an unproven track record were excluded from consideration.

DISCLAIMER: Recent legislative changes as well as turmoil in the student loan financial marketplace could cause changes in student loan program offerings. The information provided is the best information available to Rush University at the time of printing and borrowers should confirm benefit offerings with their lenders at time of application.

Benefits listed are advertised for the 2008-09 academic year. A summary of all lender provided cost comparisons is available here (coming soon) .

Please contact the Office of Student Financial Aid if you have any questions or concerns.

Information to Help You Choose Your Lender

The list above will help you to compare what other lenders are offering. So what should you know as you look to make a decision on which lender to use? Keep in mind that all Stafford loans have the same fixed interest rate and fees associated with them. Lenders do, however, have the ability to give interest rate discounts, waive loan fees, offer principal balance reductions, and offer other incentives to attract borrowers to their products. Be sure to ask specific questions of each lender, such as:

• How do I qualify for the benefits you offer? Some benefits are automatic (meaning you won't have to do anything to qualify for them) while others require you to sign up for something (like ACH payments or electronic-only statements) to realize the benefit.
  
  
• Can you tell me how many of your borrowers are receiving this specific benefit? Nationally, only 10-15% of borrowers receive lender repayment incentives of any kind, so it's important to know how lenders you are considering stack up against the national average. Also consider the implications of front-end (achieved before repayment) versus back-end benefits (achieved at or during repayment). If you make larger payments than are required each month, how will the listed front- or back-end benefit be affected?
  
  
• How long will I have to wait before I receive the benefits listed? Some interest rate or principal balance reductions are available after a certain number of on-time payments. A 2% interest rate reduction after 48 months of on-time payments might sound like a lot, but it is the equivalent of a less than 0.7% point reduction in the interest rate over a 10-year standard repayment.
  
  
• What is considered a late payment? This is an extremely important question because many benefits are only available after x-number of on-time payments. Well what is on-time? Is there a window of time when a payment must be received, or does the lender need to have your check in hand on the due date? It is extremely easy to be "late" on one payment, especially if you have just entered repayment and have not yet set up your payments to deduct automatically from your checking account.
  
  
• Do you have lifetime servicing of your student loans? Legally, lenders can sell their loan portfolio to secondary markets if they so choose (as long as they notify their borrowers in writing of the sale). What happens to your repayment incentives if your loans are sold? How comfortable are you working with a lender that has no intention of seeing your loan through to payoff?
  
  
• Do you waive loan origination and/or guarantee fees associated with borrowing? If not, am I responsible for repaying those fees? By law, Stafford loans have fees associated with them. Some lenders waive the fees entirely so that students see 100% of the funds they borrow. Other lenders might not waive the fees up front, but they credit them to principal when you enter repayment. Some other lenders charge the fees and require the student to repay them.
  
  
• How long are these benefits good for? Will they change? Repayment incentives are not a part of the Master Promissory Note that you sign with your lender. That means they could be taken away at any time.
  
  
• How long have you been in the student loan industry? This question speaks to the lender's track record. If they are new to the industry, there will be very little information about their practices available for you to review.
  
  
• When I call a lender, am I put on hold for excessive amounts of time? Can I talk to a person? If I have to leave a voice message, how promptly is my call returned? Once again, you will have a relationship with the lender you choose for up to 30 years. You'll want to be confident that they provide superior customer service before you borrower large sums of money from them.
  
  
• Do I need to take out other loans besides Staffords? Does this lender offer other loan programs that I'd like to participate in? Keep in mind that each loan program you borrow through will require a minimum monthly payment. It might be worth sticking with one lender for all your borrowing needs. Lenders might provide combined billing when you enter repayment to streamline the process. Ask about other loan programs offered.

This is by no means a complete list of questions your should ask, but it should get you started on the road to selecting a lender for your Stafford loans. Click here to review an interesting article to related to comparing student loan discounts offered by lenders. If any questions arise as you start this process, please contact our office.

The Office of Student Financial Aid
600 South Paulina Street, Suite 440 Chicago, Illinois 60612
Phone: (312) 942-6256
Fax: (312) 942-2732
financial_aid@rush.edu