Graduate Leverage Student Survey Supports Need for Preferred Lender Lists as Valuable Tools in Student Loan Decision-Making Process
WALTHAM, Mass. – February 28, 2007 – Graduate Leverage, a leading educational debt advisory service provider, today reiterated its support of preferred lender lists. Graduate Leverage made this announcement in response to recent media attention focusing on the pros and cons of these lists, including reports questioning the ability of financial aid professionals to offer unbiased advice. The position rests on the results of extensive student surveying, through which students have demonstrated an inability to determine which student loan offering is most attractive. Graduate Leverage's intermediary approach focuses on working with financial aid officers and students to provide a comprehensive debt management consultation service, during which its advisors address students' individual needs and helps them mitigate the cost of their debt.
“Just as college and university financial aid departments play an essential role in students' overall loan decision-making process, so too do preferred lender lists,” says Dan Thibeault, Graduate Leverage president and co-founder. “We agree with financial aid experts who say that there are good reasons to use these lists: without them many students would be forced to rely on solicitations and direct marketing materials sent from lenders. When presented with a sample Preferred Lender List containing five lenders, less than 15% of graduate professional students surveyed identified the best deal—which is statistically worse than a random guess. So without expert guidance, borrowers would be susceptible to predatory lending. In addition, loan servicing elements typically require professional assessment that only financial aid officers – and not borrowers – are trained to evaluate.”
Graduate Leverage also suggests that these lists, like all advisory services throughout the industry, be fully transparent in order to help students find the best possible loan program. Financial aid officers can serve as a firewall protecting borrowers from predatory lenders while ensuring the maintenance of best-in-class servicing and processing.
Graduate Leverage's position, that additional guidance beyond preferred lender lists is often necessary, is supported by a survey of graduate professional students. In addition to students' inability to select the best lender from a sample list, 73% of those surveyed reported not knowing what their rate was or how it was calculated.
“Students are frustrated by a lack of transparency and most acknowledge the need for an advisory service to assist them with navigating the often overwhelming decision-making process,” says Thibeault. “Because of the complexity and variety of borrower benefits, it has become nearly impossible for lender lists to offer a single lowest-cost deal.”
By utilizing custom analytics and debt measurement tools, Graduate Leverage's model helps students identify the lowest-cost lender based on their unique circumstances. “When we launched our service in 2003 students were somewhat confused by our model, given that we possess a Lender ID but offer advisory support for lender selection,” added Thibeault. “They quickly realize however this allows us to ensure accountability and exert collective bargaining on their behalf. Ultimately, this is what gives us the ability to secure the lowest cost of borrowing for them.”
About Graduate Leverage
Founded in 2003 by Harvard MBA students, Graduate Leverage is a free educational debt advisory service that was created to help students manage their debt effectively. The first student loan intermediary, Graduate Leverage helps students, parents and Financial Aid officers better understand borrowing options in an increasingly complex market by providing analytical tools, APR analyses and advisory services that mitigate the cost of borrowing. In its goal to secure the best deals for all students, Graduate Leverage has helped more than 50,000 students and serviced more than $2.5 B in loans. For more information, visit www.graduateleverage.com.
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