Lender Stopped Making Loans
Dear Betsy,
Mine was one of the families affected by a local lender deciding not to offer student loans this year. Even though we had already been approved for a loan for my son’s college this fall, the lender has said that we will have to start all over again. What can I do to make sure this won’t happen again?
Sincerely,
Anthony
Dear Anthony,
There certainly has been some upheaval this year in the student loan markets, and the most recent announcements have quite a few families wondering where to turn.
I would start by looking into federal Stafford and PLUS Loans. While the PLUS Loans may have a slightly higher interest rate than the private loan you had been approved for, federal loans offer many benefits not available to private loan borrowers. These include forgiveness for disasters—such as death or disability of the borrower—as well as lower monthly payment options and payment deferment options.
To start the federal loan process, ask a participating lender or your son’s financial aid office for an application. As far as which lenders are still participating, despite what you may have seen in the press, there are actually more than 2,000 lenders nationwide that still offer both federal and private student loans. Once again, your son’s school will be a good place to start for some information about which lenders they generally work with. Keep in mind that you can use any participating lender you choose.
Regards,
Betsy
