A preferred lender list is usually used by colleges to help students find lenders for private loans. Private loans may be needed if there is a gap between federal loans and scholarships. Usually, colleges will have certain criteria for private loan companies and the preferred list allows them to show students who meet the requirements.
Preferred lenders will also offer some of the same benefits as federal funding, such as loan deferment and forgiveness. Customer service is usually also better because they have worked with thousands of students before.
Colleges do not benefit from the lenders in any way financially. This means these lists will always be reputable and students don’t have to worry about being scammed.
Is choosing a preferred lender required?
No. Students do not have to pick a lender off of the preferred lender list. They can use any company or financial institution to take out private funding. Always have students research any possible lenders and let them pick the best one for their needs.
Loans are not one-size-fits-all. Everyone may need something different. Consulting the preferred lenders’ list though can make choosing a lender much easier. Most of the companies have years of experience and reviews from other students.
This allows the student to see how they have helped people before and gives them peace of mind when it comes to reputation. It will also help students narrow down potential lenders faster. They can know that the list is reliable and takes away some of the burdens of having to do hours and hours of research.
Are private loans always needed
Not all students have to take out private loans to go to school. Some students will receive scholarships or grants. The federal loans may also cover the amount needed. However, private loans are becoming more and more popular and needed with the sharp increase in tuition rates.
There are a few things you can do before looking into private lending. Also files a FAFSA every year you are in school to see if you qualify for any grants or other money that you don’t need to pay back. You can also ensure that you get federally funded loans which may have less interest rates and longer repayment plans.
Federal loans will usually give you more protection and fixed interest rates. They also don’t usually require a co-signer or credit score, which gives the student more options when borrowing.
After trying FAFSA and federal loans, students can use the preferred lender list to ensure they pick a good lender with a good reputation. It will also help students narrow down the search for finding good lenders.
Not all colleges have extensive preferred lending lists though. Larger colleges tend to have more options than smaller schools. Always ask around and see what other students have used and what has worked the best for them. Financial aid officers should also be willing to advise students and make sure they are making good loan decisions.