Paying for College

When you receive your financial aid package, you are given an amount that you are eligible to borrow as both Subsidized and Unsubsidized loans. Beyond that, you have a lot of choices. The most important choice might be which lender to choose. The key word here is choose, as in YOU get the choice of which product to use. While the perks might seem small and inconsequential, they might end up being very lucrative in the end.

Below is a list of some incentives that you should look for when deciding who your lender will be:

-Discounts for automatic debit
If you don’t mind having your student loan payments debited directly from your checking account, you can save another quarter or half a percentage point from some lenders. Unfortunately, fewer than one in six borrowers sign up for it.

-Waiver of origination, default fees
Stafford loans carry a 2.5 percent fee that’s deducted from the loan balance up front. Some lenders will waive the fee. One caution: If you later consolidate your loans with another lender, you may have to repay the fee.

-On-time payment discounts
If you’re a good bill-payer, this can save you money. Unfortunately, this discount usually goes by the wayside: Kantrowitz says that only about 20 percent of borrowers make their first 36 payments on time. If you’re a late bill payer, this discount won’t help.

- Discounted interest rates
Though Stafford loans carry a maximum of 6.8 percent, some lenders will cut that to as low as 5.5 percent, according to Kantrowitz. On PLUS loans, the maximum rate is 8.5; some lenders will go as low as 6.5 percent.

-Payment forgiveness
If you have a good payment history, some lenders will let you skip the last few payments.

-Customer service
The level of service you can expect varies widely. Look for a lender that offers phone advice or answers to billing questions 24 hours a day and has a Web site you can go to for additional help or information.

There may be more as well. It is well worth the time to shop around and choose the loan that offers the best options for you.