Pretty basic student loan questions
I'm struggling with finding a place that really spells this all out, and this has been such a wonderful resource. I have a bunch of questions and really would appreciate any help you all can provide.
Not including car payments, I have never taken out loans before, so there's terminology associated with these loans that I don't fully understand. (I have a PDF of preferred lenders from my school I'm looking at.) Specifically:
- origination fee
- default fee (with a USA Funds/Great Lakes/AES/Education Credit Mgmt. Corporation guarantee)
- interest rate reduction
Origination fee: if I understand correctly, this is a fee that I will have to pay up front that is a percentage of the total loan I'm taking out?
Default fee: I don't really get what this is. I'm assuming it has to do with defaulting on loans--is it some kind of deposit? Do I pay it up front as well?
Interest rate reduction: I do get this. ;) All these providers are offering a ~.25% reduction for people who authorize auto debit. There actually was one that offered a 0% origination fee, .3% IRR for borrowers who use auto debit, and .6% IRR for on-time payees, but they were acquired and took on the (fairly standard) rates/benefits of their parent company.
If I understand this correctly, I should pounce on offers with limited origination and default fees and any reduced interest rate possibilities, right?
Also, what kind of references are they looking for for the loans, promissory note, and so on? Parents, friends, colleagues/bosses?
And do any of you have any experience with the KeystoneBEST program in Pennsylvania for Stafford and PLUS loans? My school seems to be recommending them highly.
Thank you!
Not including car payments, I have never taken out loans before, so there's terminology associated with these loans that I don't fully understand. (I have a PDF of preferred lenders from my school I'm looking at.) Specifically:
- origination fee
- default fee (with a USA Funds/Great Lakes/AES/Education Credit Mgmt. Corporation guarantee)
- interest rate reduction
Origination fee: if I understand correctly, this is a fee that I will have to pay up front that is a percentage of the total loan I'm taking out?
Default fee: I don't really get what this is. I'm assuming it has to do with defaulting on loans--is it some kind of deposit? Do I pay it up front as well?
Interest rate reduction: I do get this. ;) All these providers are offering a ~.25% reduction for people who authorize auto debit. There actually was one that offered a 0% origination fee, .3% IRR for borrowers who use auto debit, and .6% IRR for on-time payees, but they were acquired and took on the (fairly standard) rates/benefits of their parent company.
If I understand this correctly, I should pounce on offers with limited origination and default fees and any reduced interest rate possibilities, right?
Also, what kind of references are they looking for for the loans, promissory note, and so on? Parents, friends, colleagues/bosses?
And do any of you have any experience with the KeystoneBEST program in Pennsylvania for Stafford and PLUS loans? My school seems to be recommending them highly.
Thank you!