The Northern Light

When sophomore Jillie Lozanoff chose a private lender for her student loans, she looked at a few places but eventually chose UAA's second most popular lender, the Alaska Commission on Postsecondary Education.

"They have the lowest interest rates, and it's what my friends were saying was the best thing to do,"쳌 said Lozanoff.

According to the College Board, roughly 17 billion dollars was distributed to students in the form of private nonfederal loans during the 2005-2006 school year.

Many private lenders are banking on the fact that most students don't shop around when looking for a lender and instead choose the first lender on their school's preferred list - and in an effort to collect a bigger share of that 17 billion dollars, loan companies are using unorthodox methods to attract students.

One practice that has recently received scrutiny from various financial aid officers across the country is the use of incentives from private lenders to boost the number of student loans they receive from educational institutions. To entice financial aid officers to put in a good word for their company, some lenders have begun offering iPods, monetary gifts and all-expense-paid trips to the Caribbean.

Although it is against federal law to provide incentives to financial aid officers in regards to public loans, there are no regulations in place to control the actions of private loan lenders.

UAA's Financial Aid Service Web site lists five lenders: Wells Fargo Bank, ASAP Union Bank and Trust, Alaska Commission on Postsecondary Education, U.S. Bank, and Matanuska Valley Federal Credit Union. Director of UAA Office of Student Financial Aid Ted Malone said that the banks were placed on the list according to student demand, quality of service and the amount of business UAA does with each lender.

"Primarily, our reference is based on customer service, and that's what we're looking at and judging lenders that we do business with,"쳌 Malone said. "Our most prominent lender is Wells Fargo, and they have physical presence in Alaska, and I think for a lot of Alaskans that means something to them. Our second is ACPE, and again, they're here in Alaska."쳌

Although the lender list does not include a reference to using other lenders for private loans, UAA's financial aid office does accept loans from alternate lenders. Malone encourages students to shop around and select the loans that are most tailored to fit each individual's needs.

"I think one of the important things to keep in mind is to really sit down and consider what is important to you in terms of the concepts of price versus service, the reputation of the agency, and who' going to service your loan in the long run,"쳌 said Malone. "Some of the lenders will sell their loans or have a different servicing company do it. Another thing to do is to consider if you're going to consolidate your loans in the long run."쳌

Malone said that UAA does not receive benefits other than those directed at students from its preferred lenders.

"We receive no financial remuneration at all,"쳌 he said.

Malone said he doesn't think UAA does enough business in loans each year to attract the financial incentives that private lenders have been offering other, larger schools in the lower 48 states.

"I don't think we're big enough for anybody to offer us that kind of money - we do about 39 million dollars a year in loans,"쳌 Malone said. "But some of these other schools are much bigger - I know Southern California does over 200 million in student loans each year. Everybody wants a piece of their pie."쳌

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