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And Another Student Lender Pulls Out of Private Loans

Wednesday, August 13, 2008

Last week, Wachovia pulled out of the student loans market, no longer accepting new applications for undergraduate private student loans. It's still participating in the government loan programs (Stafford and PLUS). Wachovia has now joined the ranks of Bank of America and Comerica as lenders who have stopped offering undergraduate private student loans.

What Does This Mean for You

Less Choice

You probably won't have quite as many options when it comes to picking a student lender for your private loans. Check your school's student loans lender list or try our Student Loan Marketplace to find and compare loan options.

Tougher Standards for Loan Approval

There are still a number of lenders who continue to offer student loans including Discover student loans, Sallie Mae student loans, and Citibank student loans. For many lenders, the criteria for approval have tightened up. You are more likely to need a co-signer, especially one with a good credit score.

Higher Interest Rates and Fewer Benefits

In addition to tougher standards, many students may find that loan terms this year are not quite as generous as in previous years. Student loan rates are higher than they have been in the past. Many borrower benefits have disappeared, especially with federal loans like Stafford loans.

Federal Loans First

As always, make sure that you take advantage of the federal loan programs before you turn to private loans. Anyone can take out unsubsidized Stafford loans. There is no requirement of financial need for these loans. And the government just increased the amount you can borrow through the Stafford loan program.

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