Should You Compare Private Student Loans?
Think about way to compare student loans
When the tuition bill arrives and the clock starts ticking prior to the return to campus, comparison shopping is a pretty common pathway for students and families to see what funding options are available in the market. But are private student loan comparison sites worth the time and effort?
Do these student loan sites offer me any additional information that I could not find on my own? The insider answer: maybe.
As the co-founder of SimpleTuition, a popular comparison site that I started back in 2004, I can tell you that there are some benefits and some drawbacks to comparison shopping. Ultimately, it depends on what insight you are searching for and what you are willing to put up with in terms of “remarketing” from the sites after you search. If you are looking for a high-level snapshot of the market, these sites are helpful because the biggest benefit that all student loan comparison sites all offer is time savings. In a matter of seconds, you can see a list of private student loans, sometimes with cost estimates (and, in some cases, estimated “real” offers) from banks and non-bank lenders that can be used to fill the financing gap. That’s good, right? Well, yes and no. If the results you are looking at have crunched some math for you, it could be helpful in showing you some differences between the costs of one student loan vs. another. Generally, sites like SimpleTuition, NerdWallet, Edvisors, LendEdu ansd others will provide you some decent information as long as you part with your email address. Credible will give you more specific results based on your credit, but they ask for real application level data to be able to get a credit profile. However, in all cases, you have to keep in mind that the selection you are seeing may not be 100% comprehensive. Third party sites generally show you only the lenders that they work with and those that pay them for the exposure….and the student loans at the top of the list are most likely paying more than the loans at the bottom.
Could you find all of the information on your own? Yes, you could, however, in many cases, the rate information you find for one student loan may not be presented or calculated in the same way on one lender site as it is on another. And, most of the “bank” student loan sites themselves are a bit tedious. One time saving benefit is that comparison sites are filtering the student loan results based on the school you are going to (if they asked you for your school).
All lenders have a set list of schools they work with.
If you were not asked for your college name, you might be sent on a wild goose chase to a lender with a private student loan that does not work with your specific school.
Is the rate information accurate? Not really. In most cases, comparison sites will show you estimated rates or ranges or highs and lows. Once something seems interesting, you’ll have to apply at the lender site that you have selected. And until you get to the actual bank site, submit an application and have your credit checked, it’s not 100% accurate. And one more tidbit on rates: there isn’t that much difference between the various providers
What are the three most important things to remember about private student loan comparison sites? First, in almost every case, comparison sites are getting paid by the people whose logos you are seeing. That means that you are not likely seeing all of the available options that could work for you. In fact, some lenders, such as a credit unions and not-for-profit lenders don’t advertise on these sites in an effort to keep costs low and (potentially) offer lower rates. Second, remember that email address? If you are not a fan of getting hit with marketing emails, you may want to steer clear or update your contact preferences after you get the information you are looking for. The final tidbit pertains to rates: comparison shop all you want, but if you have really excellent credit, you’ll get a good private student loan offer from just about anyone you apply with. If you’re somewhere in the middle, you might see more variation from the various providers. If you have poor credit, or lack a creditworthy co-signer, the chances of getting a loan are pretty slim.
Patrick Kandianis has been innovating in the higher education space for over thirty-five years and has spent the last fifteen focused on student finance. He oversees the strategic direction and operations of Quatromoney on a day-to-day basis and welcomes the opportunity to help more families with Quatromoney’s unique approach to paying for college.