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Loan Resource Center

Financial Aid

There are typically two choices when it comes to borrowing a federal student loan - either through a lender (bank) that participates in the Federal Family Education Loan (FFEL) program or directly from the federal government via the Direct Lending (DL) program. In either case, the financial aid office must certify your eligibility. Institutions either participate in the FFEL program or the DL program. St. Mary's College of Maryland participates in the FFEL program.

When considering which lender to borrow from, you should consider several factors - in either case - the choice is yours. Some of the factors to consider are:

• Quality of service, stability, and reputation of the lender: call the lenders you are considering using. See how long it takes for you to reach a "live" voice. How would you rate their customer service? Do they use the latest technology to deliver the loan funds? Do they service their loans (handle the loans when you are paying them back...billing, deferments, etc.) or do they sell them to another lender for servicing? If they sell them, how is the customer service of the lender they sell them to? Have they been around a long time? Are they financially stable?
• Existing relationships with lending institutions: do you have any credit cards, checking/savings accounts, car loans, mortgage, prior student loan? All of these come from lenders that may participate in the student loan program. Often times taking advantage of established relationships may be preferable.
• How much you will actually pay: The interest rate you are charged on a loan has a significant impact on the amount you will ultimately pay for the funds that you borrow. These rates are pretty uniform but some lenders will reduce the interest rate when you make a certain number of "on-time" payments or chose to have your payment auto-debited from your checking account. Some lenders are now reducing the interest rate immediately upon repayment or offering a % off your balance after a certain number of on-time payments. All of these offers fall into what lenders call "Borrower Benefits." Be very careful when making a decision to borrow based upon these marketed benefits. Research has shown that a very significant number of borrowers never receive these benefits because of the many stipulations involved (including the fact that many lenders do not honor those benefits if you consolidate your loans later on). In many cases, the actual dollars saved by these benefits are not as significant as one would be led to believe, however, the benefits that are given upfront, or immediately upon entering into repayment, are preferable and should weigh more heavily in your decision making process than promises to give you discounts after a certain number of on-time payments are made.

St. Mary's College of Maryland has open relationships with numerous lenders and service agencies from all across the country. Because we want to emphasize how important it is for you to choose your own lender - we do not state any preference of any lender over another and hence do not have a "preferred lender list".

Research and shopping around for the best loan is a good idea and the internet is a good place to start. Do your homework and remember - the choice is yours - so borrow wisely!

Alternative or Private Loans

A significant number of students and families seek loan funds that exceed the amount they are eligible to borrow from the federal student loan programs. Alternative, or private, loans are student loans that assist families in meeting the cost of their education that traditional financial aid and their own resources can not cover. These loans are generally more expensive than the federal student loans and therefore should not be considered until AFTER you have exhausted all federal loan options. Most of these loans must be certified (processed) by the Financial Aid Office. All of these loans must be considered part of your financial aid package.

Alternative, or private, loans are credit-based loans, often require co-signers, and can not be consolidated with your federal student loans. Students that borrow from both federal and private loans will typically have multiple payments which could make your monthly payment higher than it would be if you had borrowed the same total dollars from a single source.

Research and shopping around for the best loan is absolutely vital when it comes to these alternative, or private, loans. There is no interest rate cap on these loans. Use the same approach in your research as you do with the federal loans. Start looking at your current financial relationships to see what they may have to offer. Use the internet, the library, and on-line search tools. Remember - the choice is yours and so borrow wisely!

Note:

Please remember, whom you borrow from is YOUR DECISION to make and we will honor your request for whatever reason you chose to make it. Please keep in mind...these are loans...they must be repaid. Also, be very careful when reading some of the many unsolicited mailings you may receive from lenders about their products. In general, you should never give your social security number and other relevant personal data to anyone promising to help you with your financing needs without thoroughly checking them out first.

We are here to help you and if you have any questions...please feel free to contact our office.