So, you are going to college or another institute of higher learning? If you are smart, you have already done your FAFSA or Free Application for Federal Student Aid. There are some sources of aid, such as grants and scholarships, which are a limited resource and the early birds are going to have first bite at those particular worms. The FAFSA is the key to these and the loans which are available under the Federal Government's programs.
Many of the Federal student loans from the FAFSA or are funded by private companies, such as Sallie Mae (not a government organization at all as many think), Wells Fargo, College Loan Corporation, etc. These are lenders under the FFEL or Federal Family Education Loan program.
Many of you will have no choice as to who your lender is. Your school may work with the Federal Government's DIRECT program which means the loan is directly from the government. There is no confusion in that case, however you may miss out on some of the bonuses that the private companies working with the FFEL program offer, such as discounted interest rates.
Others will find that their school has a “preferred lender", and you have no choice in who their student lender is. This may be for the school's benefit, as their process is streamlined, or maybe there was an incentive from the lender for the school using only that company.
The rest of you are going to be bombarded with choices. In most cases you will end up phoning the numbers in the mailers and speaking to a student loan officer.
I used to work for one of the bigger student loan companies. When you try to get a FAFSA based loan for college and university, you will be pitched in a very particular way.
I am going to let you in on how they sell these loans to you.
The education loan consolidation and Plus / Stafford loan pitches that you will find at the consumer resource FAFSA Loan will let you be prepared to deal on equal terms with the education financial aid industry.
There is nothing underhanded, but you do want to be prepared so that you make the decision which is best for you, not for the student loan officer. These people are paid on a commission basis.
PLUS Loans and Stafford Loans
On the PLUS Loan and Stafford Loan Script page you will find an explanation of the pitch I used for Federal education loans for when the student was still at school. Two of the things that were drummed into us was to convey a sense of urgency, and also that this was a FEDERAL GOVERNMENT program. We weren't told to make anyone think that we were the government, but if they did, it certainly couldn't hurt.
Note that Stafford loans are sometimes referred to as an unsubsidized student loan or a subsidized student loan.
Once you have finished school you may want to consolidate your student loans. At this point you may have the opportunity to contact the lending companies again. And don't worry, they will be contacting you, too!
On the Consolidating FAFSA Loans page you will find the a summary of the script that a lender will use to convince you to consolidate. Again the modus operandi was to convey a sense of urgency, and also that this was a FEDERAL GOVERNMENT program.
Remember that there are deadlines for these loans but they are usually based on publicly known dates such as school dates and interest rate changes by the Federal Government. If a lender tries to tell you to get your application in within three weeks or “your file will be closed", don't worry. The “file" can be opened again real easy!
All the best in your education, and don't hesitate to contact us if you have any questions or comments.
Paul Gilchrist is a former student loan officer. He has founded the student loan consumer resource FAFSA Loan