My first year as a student at CW Post, I did not have the means to pay for my tuition which was roughly $16,500 per year at that time (2000). With not much experience concerning such matters, I consulted the schools Financial Aid/Advisement Office about securing a student loan.
When I arrivewd at the office I was informed that I should apply for a Federal Loan, however that loan maxed out at about 5,500 on an annual basis, so there was an approximately another 11,000 to account for plus the cost of books and materials. At that point I was advised that I would have to secure a loan for the remaining amount from a non-federal afilliated financial institution and that the way to go was with this was via a P.L.A.T.O loan product.
We assumed that 1,00 would be sufficient for books and materials so I applied (at the advice of a financial aid/adviser official at CW Post) to P.L.A.T.O for a loan of $12,000. P.L.A.T.O approved my loan with predetermined cosignor obligations. In order for me to obtain my loan I would need a cosignor. I chose my uncle because I knew he had a stellar credit rating and would act as a excellent credit enhancement to my loan.
My loan was approved by P.L.A.T.O in a letter dated November 1, 2000, with a loan amount of $11,999.98 and a loan origination fee of $1,079.02.
The terms of my loan are as follows:
Start Date: 12/1/2000
Maturity Date: 12/1/2020
Interest Rate: Prime rate + 2.90%
I currently pay 12.15% interst on the aforementioned loan.
In addition, I began repayment of the loan as soon as it was disbursed (at the advice of a P.L.A.TO representative) which effectively prevents me from refinancing once I realized how bad the loan was.
What has frustrated me with this process is the following year I was procrastinating and running late with securing tuition funds for that year. Through my own fault I was left with few options, so I called Sallie Mae on a whim (on my own without consulting my Financial Aid/Advisement Office) and secured a loan in the amount 19,999. A larger loan was secured because my procrastination left me unable to obtain the 5,500 federal loan. Sallie MAE issued my a signature student loan, which from my understanding is a not truely a student loan and usually carries more negative repayment terms to the holder of the loan as compared to a traditional student loan product.I beleive my student loan is classfied as a personal student loan. Anyway, my terms under this Sallie MAE Signature loan are still far better than the terms under the P.L.A.T.O loan my school recommended. My interest rate on the Sallie MAE Loan puts me in a position that is more favorable to the prime rate whereas, the P.L.A.T.O loan puts me in a significant worse position + 300 bps.
My point or objective complaint is that I was under the impression that student loans were to be granted at rates that were more favorable than typical other loan products, I understand that personal credit has something to do woth it, however in both instances I had the securement of a relative who is very financially secure.
I find it truly ironic from what I've read in the press in the past month regarding relationships between Student Lenders and Financial Aid offices and the fact that in a completely blind manner I was able to secure a much better student loan than that of the loan my financial aid office steered me to.
I feel the terms of my P.L.A.T.O. loan, specifically the interest rate and front-loading of it are usary in nature.
To date I know that Wells Fargo has purchased my loan from P.L.A.T.O Educational Loan and I am not sure what has becoem of them. However, aside from the hardships this has caused me, I want to prevent them from doing this to other unsuspecting students in the future.
