At Carleton, we provide a recommended lender list of four lenders for our Federal loans: College Board, College Loan Corporation, Student Loan Xpress, and Total Higher Education (T.H.E). Last year we felt it was time to review our list given the many changes taking place with loan options and borrower benefits. Last summer we sent out a Request for Proposal (RFP) and invited lenders to submit proposals specific to Carleton. We followed the guidelines proposed by the National Association of Student Financial Aid Administrators (NASFAA) in our RFP. Both general and technical questions were posed to all lenders. In addition, we developed a number of case studies and asked lenders specific questions to ascertain the full cost of a loan and the benefits that could be expected through their program. We were also careful to ask about the proportion of borrowers who receive certain benefits to test assertion against reality. We received 20 proposals from lenders across the country. The SFS staff reviewed each one thoroughly and determined six finalists based on the clarity of the proposal, benefits available to our students, and cost of the loans over time. We then invited all finalists to campus for a face-to-face meeting that would further clarify their proposal and allow us to pose direct questions to them. That step eliminated two lenders from consideration. The final four lenders were re-reviewed and we also made cold calls to their toll-free phone numbers to determine the quality of their customer service and reception our students would receive. The four lenders on our recommended list were able to meet the high standards we set forth and conformed to the personalized service our students deserve. Throughout our entire selection process we had uppermost in our minds the financial benefits that our students would gain and the importance of serving our students and their families in a manner that represents Carleton well. Based on our review, we believe the lenders we recommend provide our students with the best loan products available. No lender asked for concessions that would lead to even better rates or options and no lender offered financial considerations for placement on our list.

Alternative Loans have also come under scrutiny because they are less regulated by the government and more prone to abuse by lenders dealing with financially strapped students. These are loans typically made to students who may not have many other options (including parents unwilling to contribute) for financing college. We have seen an increase in this type of loan over the last several years. Through our consortium with the Associated Colleges of the Midwest (ACM) we began exploring loan options since we agreed there was a common need on our 13 campuses. Two years ago we asked lenders to respond to a RFP that sought an alternative loan that would give us 100% approval for our students and keep the spread between best interest rate and its worst rate (depending on credit) within two percentage points. We identified only one lender that was willing to make loans under these terms at reasonable interest rates. The ACM Board of Directors approved the sponsorship of this loan about a year ago and the loan volume thus far has exceeded our expectations. Clearly there is a need for this type of financing option and working together we were able to negotiate unique loan terms that most lenders did not think possible. This ACM Loan is a positive example of working with a lender to fill a gap that was not being addressed adequately by institutions, states, or the Federal government. It may be possible to find a better “deal” for individual students, but this is the only alternative program that we know of willing to take a risk on all of our students and not just a select few. During these loan negotiations, the lender did not offer, nor did we ask for any financial considerations that would go directly to any of the ACM colleges.

At Carleton, we have worked hard to ensure that we have sufficient tools to offer our students and their families who are faced with the cost of coming here. The reality is that we cannot count on only one source of financing for any one student. Instead, we must often draw on multiple types of assistance including loans that must be repaid. As described above, we have been very careful and deliberate in our recommendation of loans to students. We are confident that our students are not being disadvantaged by taking any of our options. Financial considerations discussed by lenders have been those directed to students in the form of lower interest rates, fewer fees and other borrower benefits.

It is also our policy that students can seek loans using any lender they choose. Our recommended lenders are only suggestions, and we will not hamper any student nor parent from using other lenders. However, we have prepared a recommended list because our students and parents continue to ask us to provide them with direction when choosing a lender. The student loan business is very competitive and can be confusing. So, it is not surprising that many students seek advice from us and place their trust in our recommendations. We take that trust seriously, and we believe we have earned that position with our students.

It is our intention in the SFS Office to continue our efforts to provide our students with all possible resources including grants, scholarships, student employment, and loans. We welcome your comments and questions by contacting us at 507-222-4138 or at mailto:financialaid@acs.carleton.edu.

Rodney Oto

Director of Student Financial Services

April 7, 2007

Update

Since the date of this description, the College Board Loan program has withdrawn from student loans and is no longer an option for our students. The other lender on our list continue to be available for loans to our students. In addition, the private alternative loan through the ACM and Student Loan Xpress is no longer available. We are currently in the process of identifying other lenders willing to make private loans to our students. Recent changes to the student loan industry have created some volatility among lenders and their offerings. WE continue to work on behalf of our students to ensure that financing options are available at reasonable terms and conditions. As these changes materialize, we will notify students and their families directly and via the website. As always, we urge all borrowers of student loans to carefully review all documents and ask relevant questions prior to signing any promissory notes. Thank you for your patience regarding this issue.

Rodney Oto

Director of Student Financial Services

February 1, 2008