Lender Selection Policy

From UConn Student Financial Aid Services

Lender Selection Policy

The University of Connecticut maintains a list of suggested lenders that we believe offer competitive pricing, easy loan processing, and strong customer service. You may choose one of our suggested lenders or any other lender who participates in the loan program from which you are eligible to borrow.

Our suggested lenders for 2007/2008 were selected based on a review of the borrower benefits offered. Factors included in our decision were loan fees paid on behalf of the borrower, interest rate reductions for on-time payment, and/or principal rebates that are earned by paying on-time. We also considered other factors such as customer service provided to the borrower, simple electronic application process, and the ability to deliver funds electronically.

We are currently finalizing the process of selecting our suggested lenders for the 2008/2009 school year and beyond via a competitive Request for Proposals (RFP). This RFP was sent to numerous lenders, advertised on the Connecticut and National financial aid association listservs, and posted publicly on the University’s website. Any lender participating in one or more student loan program was eligible to submit a proposal. Our deadline for submitting proposals has passed and we are currently in the process of finalizing our selections via committee. We have completed this process for Stafford and PLUS loans. We are still in the process of finalizing our selections for alternative loan products.

Each loan program was reviewed independently and without regard to proposals submitted for other loan programs. We selected lenders for our suggested lender lists based on a points awarded system and committee discussion. Our suggested lender lists will be reviewed annually. Our ultimate goal was to find the lenders that offer the best possible benefits, both financial and service-based, for our students. Before a lender is placed on our suggested lender list, that lender must commit in writing to the borrower that the loans may be sold but that the terms and benefits will not change. The lender must also notify the borrower that loan benefits will change if the student consolidates.

Note that quite a few of our Suggested Lenders have recently changed the benefits they orginally offered to borrowers. This is due to a reduction in lender subsidies and, more recently, problems in the credit market. We advise students and parents to be educated consumers and compare the borrower benefits offered by the lenders on our Suggested Lender List with those offered by other lenders.

The factors to be considered for each loan program follow, in order of importance. Factors at the top of the list were weighed more heavily than factors at the bottom of the list.

For Stafford and PLUS suggested lender lists, we considered: Immediate borrower benefits and fees paid on the borrower’s behalf, Borrower benefits that must be earned by the borrower, Telephone customer service for the borrower, Technical support, Ease of loan processing for the borrower, Ease of loan processing for the school and compatibility with our computer software, Customer service for the school (i.e. assistance in resolving loan delivery issues), Web-based services for borrowers, Repayment service for the borrower, Stability of the lender, Debt management and default aversion services, Marketing techniques (manner in which the lender markets loan products and uses student information), and Experience of peer schools.

For Alternative (non-federal loans) suggested lender lists, we are considering: Interest rate, Fees, Immediate borrower benefits, Borrower benefits that must be earned by the borrower, Telephone customer service for the borrower, technical support, Ease of loan processing for the borrower, Ease of loan processing for the school and compatibility with our computer software, Customer service for the school (i.e. assistance in resolving loan delivery issues), Web-based services for borrowers, Repayment services for borrowers, Flexibility of the loan program to meet the needs of various student situations, Deferment options, Stability of the lender, Debt management and default aversion services, Marketing techniques (manner in which the lender markets loan products and uses student information), and Experience of peer schools.