August 1, 2008

Shopping for private student loans? Do it quickly!

Posted in Private Loans, Student Loan News, The Financial Aid Process at 11:07 AM by Joe From Boston


According to the New York Times, shopping around for private student loans will affect your credit score, unlike mortgages or house loans.

Conversely, you could easily overpay by going with the school’s recommended lender, as it may not be the best one for your position.

So what’s a family to do?

Read the entire article by clicking here.  Also, here’s an excert from the New York Times:

To quote a rate, lenders check an applicant’s credit history. And every time a shopper asks a lender for a rate quote, it can show up as another inquiry on a credit report.

Lots of inquiries send the wrong signals to the formulas that create the popular FICO credit score that Fair Isaac administers, namely that borrowers may be applying for multiple loans because they’re financially troubled and potentially going bankrupt.

While Fair Isaac has mined years of data to determine that people making a bunch of mortgage and auto loan applications over a short period are almost always innocently shopping for a loan, it hasn’t declared student loan shoppers similarly safe.

One reason is that the company doesn’t have a big pile of private student loan data to mine. These loans are relatively new, and not many people shopped around for the best rate before the student loan scandals erupted.

Advertisements

2 Comments »

  1. Rob,

    Since this post was written more than a year ago, many things have changed. Included in the new rules governing colleges is that colleges and universities can no longer receive kickbacks like they used to.

    As a result, there are no “preferred lender lists” where a school forces you to go with their lender(s) of choice. Some now have a “lender’s list” that they may give you if you ask, but you can choose any lender at all nowadays. The possible “lenders list” at schools only exists to provide a list of reputable lenders; the schools and lenders no longer endorse each other.

  2. Rob said,

    You’re absolutely correct about being cautious about going to the college endorsed lender. You don’t think they recommend for no reason do you?


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: