Wells Fargo Introduces New Student Loan Options
May 24th, 2010 @ 3:20 PM by Debbie Dragon
In response to the new regulations signed into law by the Obama administration governing student loans, Wells Fargo is rolling out a new student loan program. Private Banks starting July first of this year will no longer be able to issue federal backed student loans. Instead, the federal government will now directly loan to students. Private Banks that have been in the student loan lending business are estimated to be out approximately 2 billion a year in profits. Private Banks are now scrambling to stay in the business by offering their own loans for students.
Wells Fargo’s new loan program, The Wells Fargo Student Loan for Parents, will allow parents the ability to help fund their child’s college education through a private bank loan. The loan will have some unique features. First off, the loan will available not just to parents, but to anyone who is helping sponsor the student through college. A guardian, grandparent or even an aunt or uncle could qualify for a loan. These loans will also be interest only for up to 48 months, while the student is in school and can be paid back for an extended time period of 15 years.
There are some notable differences compared to federal funded student loans for parents. Wells Fargo loans will not have an origination fee, where federal loans do. The loans will also carry an adjustable interest rate, where the federal loans are fixed. The money from the loans will be sent directly to the loan recipient, where federal loans are mailed directly to the financial institute. Requirements for underwriting will also be a bit different and will require more documentation that federal loans. Finally, loans can be up to $25,000 per year.
Wells Fargo expects that parents and others looking for funding for these types of loans will have exhausted other means of college funding.
“Before we discuss any private loans with our customers, we first advise parents and families to exhaust all grants, scholarships and federal funds,” said Kirk Bare, head of education financial services at Wells Fargo.
For those families that are able to receive college funding elsewhere, these Wells Fargo private loans are not necessarily a wise choice. For those however, that have no other options, Wells Fargo is offering a viable and affordable means to pay for college.
Debbie Dragon is a full time freelance writer and the co-owner of ReliableWriters.com.