SELECTING A LENDER

You have the right to borrow from any lender you choose.

The Office of Financial Aid is available to help you with the loan application process. However, the choice of a lender is ultimately your decision.

If you choose to borrow a federal loan from a HESC-registered lender (see information about guarantee agencies below), you must complete an electronic Master Promissory Note (e-MPN) online on the HESC web site at www.hesc.com. You will need your FAFSA PIN to complete the e-MPN.

If you choose to borrow a federal loan from a non-HESC lender, please contact the Office of Financial Aid, identify the lender that you prefer, and we will provide you with further instructions.

Here are some things to consider as you review possible lenders for either a federal loan (i.e. Stafford or PLUS) or a non-federal alternative (private) loan:

• Does the lender typically sell its loans to another lender or loan servicer? If so, your loan could be owned and managed by another organization, rather than the one from which you borrowed. Your lender is required to inform you if they sell your loan. If your loan can be sold, ask if your borrower benefits/interest rate discounts will continue, and get that information in writing.

• What interest rate discounts and/or other borrower benefits do the lenders offer? Are any of those benefits contingent on your making a certain number of consecutive, on-time payments? What are the chances that you will qualify? What percentage of students who take loans from the lender actually qualify for the benefits? Are combined billing options offered if a student borrows a federal loan and a private loan from that same lender?

• What is the interest rate of the loan? Is it fixed or adjustable? Will it remain the same for the life of the loan, and if the loan is sold?

• Will you actually get the advertised "as-low-as" interest rate?

• What types of fees are charged by the lender (i.e. origination and/or insurance fees)? How much are these fees? Does the lender waive any fees or pay them on the borrower's behalf? If so, what does it take to qualify for the benefit and what percentage of students actually qualify?

• When will repayment begin? If repayment starts after you leave school, will interest be added on to the principal balance while you are going to school? What circumstances will result in the capitalization of interest?

• What is the total amount that you will have to repay over the life of the loan, and what will the monthly payments be?

• How long is the total repayment period, and is there any penalty for early repayment of all or part of the principal?

• What are the penalties for missing monthly payments? When is a payment considered late? What are the terms and conditions for hardship deferments/forbearance?

  Many incentives require the borrower to make a set number of consecutive on-time payments in order to qualify, beginning with the first payment due. In many cases, missing or being late on one payment may forfeit your ability to qualify for the incentive. Some lenders offer incentives that allow you to rehabilitate a delinquency and restore the incentive at a later date. In our experience, the most common reason a student loses their ability to qualify for a borrower incentive is because he or she misses or is late on the first payment due.

  Students who enroll in an auto-debit program with their lender prior to the first payment due tend to have a higher rate of qualification for on-time payment incentives. However, the largest number of students qualify for incentives which offer the opportunity for rehabilitation from a delinquency status.

• What are the options for Loan Consolidation? Loan consolidation gives you the opportunity to combine and refinance your student loans, extend repayment terms, reduce monthly payments, and guarantee a fixed interest rate.

STUDENT LOAN GUARANTEE AGENCIES

What is a guarantee agency?

A guarantee agency protects student loans against default. The lender collects a default fee (commonly 1 percent) from each loan it disburses and pays it to the designated guarantee agency to insure the loan. (Some guarantors may waive or reduce the fee, depending on their reserve fund.) If a borrower defaults, the guarantee agency reimburses the lender for the balance remaining on the loan.

What is the New York State Higher Education Services Corporation (HESC)?

HESC is a guarantee agency for federal student loans and New York State student aid.

Do I need to be a New York State resident to go through HESC?

No. If you are attending a school in New York State and meet the eligibility criteria for a Federal Stafford Loan or Federal PLUS Loan, you may go through HESC by borrowing from a HESC-registered lender.

Which lenders are registered with HESC?

HESC works with most major Federal Stafford Loan and Federal PLUS Loan lenders. You can go to the "Paying For College" area at www.hesc.com for a directory of all HESC-registered lenders (there are more than 100).

Am I required to go through HESC for my Stafford or PLUS Loan?

No. You may elect to borrow your federal loan from a lender registered with another guarantee agency.

You have the right to borrow through any guarantor you choose.

If you wish to borrow from a lender registered with HESC, you should complete the NYU certified loan application (called the Master Promissory Note, or simply the MPN) online on the HESC web site at www.hesc.com.

If you choose to borrow through another guarantee agency, please contact the Office of Financial Aid, identify the guarantor that you prefer, and we will provide you with further instructions.