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Private Education Loan Fundamentals

Private Education Loan Fundamentals . Aubrey Stelly Senior Lender Consultant TG. Session objectives. Provide the tools necessary to discuss the factors involved in evaluating private loans Enable you to provide a framework for borrowers to evaluate their private loan options.

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Private Education Loan Fundamentals

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  1. Private Education Loan Fundamentals Aubrey StellySenior Lender Consultant TG

  2. Session objectives • Provide the tools necessary to discuss the factors involved in evaluating private loans • Enable you to provide a framework for borrowers to evaluate their private loan options

  3. Factors for borrowers to consider • Interest rates • Fees • Program types • Repayment terms

  4. Interest rate factors • Index • Prime Rate • LIBOR • Commercial Paper Rate • Credit Score • Credit history • Co-signer • School

  5. Index definitions • Prime Interest Rate — Interest rate that commercial banks charge their most creditworthy borrowers, such as large corporations • LIBOR (London Inter-bank Offered Rate) — Interest rate that banks charge each other for loans (usually in euros) • Commercial Paper Rate — The rate paid by large corporations for short-term borrowings, usually less than the Prime Interest Rate

  6. Interest rate example

  7. Fees • Origination • Late • Ways to reduce • ACH • Banking relationships

  8. Fees example

  9. Program types • State private loans • Private — General study • Private — Specialty study

  10. Repayment details • In-school • Post-completion • Capitalize interest or not

  11. Interest capitalization example

  12. Repayment length example

  13. Additional considerations • Trade-offs • Penalties • Co-signer impact

  14. Summary • Interest rate is not always the most important factor. • Every borrower’s situation is different. • Borrowers should conduct their search over a short time span so that the basis of the interest rates is similar.

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