Friday, May 05, 2006

Financial Aid

I finished my financial aid paperwork last week. Here are some tips for picking a lender:

1. Many lenders will offer "Zero origination fees"
2. An interest rate reduction will often save you more money than an option for cash back based on your original principle amount.
3. Find out when your lender compounds you interest. You want a lender that rarely compounds the interest. Preferably just once right before repayment. (This way you aren't paying interest on interest because they add the interest back into your principle).

I went with ESF (Education Services Foundation). They offered an immediate 2% interest rate reduction (if you sign up for auto debit) and no origination fees. Unfortunately, I had to call to ask when my interest would be compounded. The first person I spoke with had no idea what compounded interest was. The second person had to call her supervisor. Scary...but, they don't compound the interest.


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