At all of our recent advisory board meetings, we heard the same message: the origination fee credit is a valuable selling point for the T.H.E. Loan Programs.
We got the message, and we agree. Our non-profit mission is focused solely on lowering the cost of financing higher education, and this credit is one of the many ways we do that.
We’re pleased to announce this feature as part of our Grad PLUS terms for 2007-2008, effective for new loans disbursed on/after 4/1/07.
T.H.E.’s Grad PLUS terms for 2007-2008 include:
- 3% origination fee credit when the loan begins repayment
- 0% default fee
- .25% T.H.E. Bonus immediately after the first disbursement
- 1.3% T.H.E. Bonus when repayment begins
And to ensure that students aren’t misled by some consolidation pitches, we’re adding a benefit to our Grad PLUS terms for 06-07:
- .25% T.H.E. Bonus beginning January ‘07 for existing Grad PLUS loans in in-school, deferment or forbearance status
The origination fee will be credited at repayment. Because interest accrues on these loans and doesn’t capitalize until repayment, the borrowers will begin repayment with the same balance under the new credit method.
The .25% T.H.E. Bonus features take away the incentive to consolidate to drop the rate from 8.5% to 8.25%. We want to strongly caution students not to fall for the sales pitch that says they’ll reduce their interest rate .25% on their Grad PLUS loan. In reality, it will cost them more overall. Consolidators have managed to incorporate regulations that force lenders to release all loans when a request for consolidation is received. This means that a consolidator can make borrowers believe they are dropping their Grad PLUS rate from 8.5% to 8.25% but they may also pick up the underlying Stafford or consolidation loans, and actually raise the rates on those loans because of the weighted-average formula.
Thanks for telling us what you wanted. We’re happy to deliver what you asked for — especially when it means students will save even more.