There are two primary types of loans that most students may consider to finance their education. The first are federally guaranteed student loans, which include Stafford Loans, Parent PLUS, and Graduate Plus. You can find additional information about these types of loans here. The second type of loan is a private or “alternative” loan. These loans are offered by private banks, and are not federally guaranteed.

Federally Guaranteed Student Loans:

Schools generally participate in either the Federal Family Education Loan Program (FFEL) or Direct Loan (DL) program. Schools who participate in the FFEL Program receive their loan funds from a variety of banks, credit unions, or other private lenders that participate in the program. For a variety of reasons, CU Boulder participates in the Direct Loan (DL) program. In the DL program, the funds for your loan come directly from the federal government (via the financial aid office). Eligibility rules and loan amounts are identical under both programs. The Federal Government sets the rates and all other terms for both of these programs. A big advantage to participating in Direct Loans is that loans are never sold, so students and parents are assured one place for repayment and information. Because CU-Boulder does not deal with lenders in the federal loan program, but only with the federal government directly, there is no financial incentive to the Financial Aid office to grant a loan to the student. Since the federal government is our only lender, we do not have a preferred lender list for this program.

Alternative Loans:

Alternative loans, by their nature, must be acquired from private lenders. The Financial Aid office periodically surveys lenders to determine their loan terms, but this is not a preferred lender list. A student is welcome to use any lender he/she chooses. Below are some answers that lenders often tell you to ask your financial aid office. We welcome these types of questions, as we believe that the more you know, the better borrower you can be. Remember, all of these answers refer to Alternative Loans only.

1. Can you guarantee me the lowest rates?

No. We look at lenders based on our assessment of the lowest overall cost to the borrower based on a number of criteria. We attempt to evaluate different situations for students, and look for the lowest cost for each of those types of groups (for example, foreign students, students with poor credit, etc). Often your situation may be different than our test cases, and the loan business changes all the time. So we recommend asking lenders specific questions regarding their programs, loan limits, interest rates, fees, approval/selection criteria, repayment options, late fees, etc. before you borrow! We reevaluate lenders infrequently, but regularly.

2. Do you participate in revenue sharing?

No. Our office accepts no payments from lenders, either to be on our preferred list, or to process a loan.

3. Do you have any memos of understanding?

No. To be on our current preferred lender list, the lender had to respond to a request for information that asked them a number of questions regarding terms, service, etc. There are no written agreements or contracts with these lenders.

4. What was your lender selection process?

We send a request for information to the major Colorado lenders, as well as a few National lenders. We asked for information about rates, fees, repayment, servicing, discounts, etc. We evaluated this information based on a number of common criteria to attempt to determine the best deals for our students. And you, as a student, have the final choice – we will work with any lender you choose.

5. Do you accept inducements from lenders?

Neither the financial aid office, nor any of the staff, accepts any trips, payments, or gifts from lenders. Our office policy is even more restrictive than the restrictions required by Amendment 41 to the Colorado Constitution. We don’t accept meals, cash, and trips. When staff attends a conference, we will not attend any function sponsored by a lender that is not open to all conference participants.

6. Do your lenders provide override pools?

No. We are not involved in the process of whether a lender decides to offer a student a loan. We do not guarantee lenders any set number of students, nor do we have any involvement in whether a lender rejects a particular student from getting a loan.

7. Do you have a school as lender program?

No. This is a form of the FFEL program that allows a school to act as lender for Federally Guaranteed loans. Our only lender is the Federal Government.

8. Do you have personal relationships with lenders?

While we may meet with alternative loan lenders infrequently to learn about new offerings or discuss service issues, we do not make any decisions whether to work with a lender based on these meetings. The student chooses the lender, and we certify the loan.