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Private Alternative Education Loans

Selection Process for the Preferred Lender List for Private Alternative Education Loans at Moravian College

Federal loan regulations, set by the Department of Education, require a school that chooses to provide a Preferred Lender List to borrowers to disclose their method of selecting the lenders included on their list of suggested lenders. This guide is to provide information to borrowers about the method Moravian College's Financial Aid Office used to create the 2010/2011 Preferred Lender List.

Why does Moravian College provide students with a Preferred Lender List? 
The Financial Aid Office provides students with a Preferred Lender List because it provides a comparison of selected lenders in relatively consistent terms, reducing confusion and assisting borrowers and their families in making the best-informed decisions.

The Decision Process 
A Request for Information (RFI) was sent out to those lenders most often chosen by students attending schools that belong to the Lehigh Valley Association of Independent Colleges (LVAIC). The RFI included a list of questions regarding those lenders' products and services and included the following topics:

Origination Fees
Grace Period
Standard Repayment Term
Extended Repayment Terms
Current Interest Rate
Interest Rate Ceiling
Interest Rate Structure
Possible Guarantors
Possible Servicers
Up-Front Borrower Benefits
Borrower Benefits at Repayment and Percentage of Borrowers that Qualify
Approval Rates

The information was reviewed and evaluated by Financial Aid Office staff members with the goal of selecting the lenders that best served the borrowing needs of Moravian College students.

Criteria Used to Select Lenders

  • Borrower Benefits
    In considering benefits, it was important to evaluate the lenders who offer borrower benefits to students as well as the percentage of the actual borrowers who qualified for such benefits. Such borrower benefits that were evaluated included the following:
    • Interest rates and terms
    • Fees paid by the lender or the responsibility of the borrower
    • Availability of repayment options
    • Back-end borrower benefits (i.e. principal reduction, interest rate reduction, etc.)
  • Quality of Lender Products and Services
    In evaluating lenders' quality of products and services, it was important to determine which lenders provide exceptional customer service to its borrowers as well as the school. Such quality of products and services criteria used to evaluate each lender was as follows:
    • Ease of application process
    • Web-based application and services
    • Proactive customer communication, including easy access to borrower's current and cumulative borrowing and estimated repayment information
    • A toll-free number for information and advice
    • Timely and responsive processing of loans including resolving issues
    • Expedient and simple PLUS pre-approval processes
    • Knowledgeable customer service representatives
    • Dedicated service or marketing representative assigned to the school
    • Lenders practice to recommend students to maximize Federal financial aid first
  • Lender Stability
    With regulatory changes and market instability affecting lenders' decisions to remain in the student loan industry, it was important to select lenders who are reliable and will continue to service borrowers for future years. Such lender stability criteria used to review each lender included the following:
    • Mission Statement
    • Number of years in the student loan business
    • Source of stability of capital used in providing loans
    • Relationships with other loan partners
    • Existing relationships with guarantee agencies
    • Default rates
    • Reputation at the local, state, regional and national levels
    • Marketing practices including its promotion of products and services
    • Demonstrated security of borrower information