The Politics of Financial Aid

You might think that getting a student loan is a matter of simply going to your local bank or financial aid office, or that a student loan is a student loan is a student loan. However, the recently-passed Budget Deficit Reduction Act of 2006 suggests that you do your homework on how and where you get your student loans.
Why? Because of the long-term implcations of how you pay back your loans once you graduate.
For example, there’s a flurry of Congressional activity going on now to repeal the “single lender rule.” Currently, if you obtain all of your student loans from one lender, you have no choice but to consolidate your student loans with that lender. So what? you might ask. Such a decision could cost you thousands of dollars over the life of the consolidation loan, that’s what!

You see, many student loan consolidation companies offer “borrower benefits” which can lower your overall interest rate. This includes interest rate reductions for auto-debit payments, on-time payments and so on.
If you’re stuck with one lender, you have no choice but to consolidate with that one lender. That means you have no right to shop around for better rates or better customer service.
So if you’re in the market for student loans, pay attention to law changes — including the status of the single holder rule, for one — and how they may affect you in the long term.