Origination Fee

[deep in debt]

My son has been offered a student loan from Bank One. The origination fee is 9.5%. Should he keep shopping?

 

TIA

[2kids2cats]

Wow, that is high. Is this a Stafford loan? If so, he can do much better. If it is a private loan then I don't know much about those. My Stafford loans are through Citibank and the origination fees are around 1.5%-2%.

[afaz]

The max origination fee for a Stafford loan is 3%, so I imagine it is a private loan. If he doesn't have good credit, that could be right. Did he try apply with a co-signer? Usually private loan lenders will give much better rates and terms to students with co-signers, especially if the student has limited or poor credit. If there is no co-signer available, he could try another lender, but most lenders like co-signers for students, undergraduate students especially.

[deep in debt]

I thought that was a little steep. No co-signer available. I guess we will keep looking. His credit is not bad, just not much of it, he's only 19. Still a work in progress. Thanks for the input!

[afaz]

Well, most lenders also like to see at least 2 years of credit history. If he doesn't have that, and there is no co-signer available, he may be stuck with a less than favorable loan. It's up to you if you want to shop around or not. Good luck