Why Does Stony Brook University Have a Sample Lender List?
How Does Stony Brook University Select Its Sample Lenders?
Can a Borrower Select a Lender Not on the Sample Lender List?
Choosing a Lender
Stony Brook University’s Sample Lender List for Federal Stafford and PLUS Loans
Completing Your Electronic Master Promissory Note (e-MPN) at HESC

Choosing a Lender

One of the steps in completing your electronic Master Promissory Note (e-MPN) for the Federal Stafford and/or PLUS loan programs is choosing a participating lender. While the U.S. Department of Education regulates the terms and interest rates for the Federal Family Education Loan (FFEL) Program, the lender is where the money is actually borrowed from.

Since all lenders charge the same interest, the differences between lenders can be found in customer service and technology, lender reputation and stability, borrower benefits, and the use of another company to service the loan (servicer). We highly encourage you to compare lenders and choose one that meets your needs.

Reasons for selecting a particular lender can vary from person to person. Some choose a lender based on name recognition or where they have already had positive banking experiences. Others prefer the immediate benefit of lower origination fees, resulting in more money up front. Still others prefer the long-term advantage of repayment options, like an interest rate reduction as a reward for making payments on time.

Students and parents can borrow from any lender that participates in the FFEL Program. To assist you in deciding which lender to choose, we have listed some important questions to ask a lender:

  • Does the lender participate in the following HESC (New York State Higher Education Services Corporation) processes:
    • EFT Express? This will expedite the receipt of the loan funds to your University account.
    • PLUS credit check? Eligibility for a PLUS loan is based on approved credit. Lenders that participate in the HESC credit check for PLUS allow the borrower to get instant on-line credit results when completing the Electronic Master Promissory Note (e-MPN) process.

  • How long has the lender been in the education loan industry?

  • Is the customer service good? Call the lender and ask questions.
    • What are the customer service hours?
    • Can I access information over the internet?
    • How long did I wait for my call to be answered?

  • Is extra effort put forth to help borrowers avoid default?

  • What are the terms and conditions for hardship deferments?

  • Does the lender use a servicer? If so, who is the servicer?
    • A servicer is an organization that collects payments on behalf of the lender. They also perform other administrative tasks associated with maintaining a loan portfolio, such as disbursing loans, monitoring loans while the borrower is in school, collecting payments, processing deferments and forbearances, responding to inquiries and ensuring compliance with federal and guarantee agency requirements.

  • Does the lender sell their student loans to the secondary lender market?
    • A secondary lender is an organization established to purchase education loans from lenders. While selling loans is common practice among lenders, you may want to confirm that the sale of your loan will not change the terms and conditions under which the loan was originally made.

  • What benefits are offered?  Realistically, what percentages of students actually achieve and receive these benefits?
    • For example, some benefits are tied to students making a certain number of on-time payments. What percentage of students actually achieve this and receive the discount or credit?

  • Can the benefits offered on the loan change? How? When?

  • Are the benefits in writing? If so where can I find them?

  • If I lose my benefits is there a “restoration of benefits” program?

  • Are there any origination fees?
    • Loans may have one or more fees, such as guarantee, origination, and insurance of application fees. These fees are usually deducted from the amount you borrow before the loan is disbursed.

  • How is the Annual Percentage Rate (APR) calculated?
    • APR is the interest maintained on a loan for a one-year period.

  • How often is loan interest capitalized? If so, when?
    • Interest Capitalization occurs when accrued interest is added to a loan’s principal balance. Lenders may capitalize interest quarterly, annually or once at repayment. The loan becomes more expensive the more frequently accrued interest is capitalized.

Use common sense when evaluating a potential education loan lender. If something sounds too good to be true, it usually is.