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Wednesday, August 22, 2012

A Web Site That Aims to Help Manage Student Loans


I don't have student loans anymore (thank goodness). But I do recall that managing them was a challenge. How many loans did I have? How much was I paying in total? When would they all be paid off? Who is Sallie Mae, and why did I borrow so much money from her?

A new Web site called Loanlook.com aims to help current students and graduates manage their financial aid and loans with less confusion. The site allows users to access federal loans and grants, but will be expanded to include private loans in about a month. (Parents can also register to see information about PLUS loans taken out on behalf of their children.)

The site makes use of data that is provided on the National Student Loan Data System, the central database for student aid maintained by the federal Education Department, as well as your university (and any institutions you may have attended previously). But Loanlook allows the information to be displayed and a nalyzed in a more useful way, said Mark Rowland, vice president of information systems at Loanlook.

That all sounds promising. But Loanlook probably has some skepticism to overcome. That's because the site's parent company, Ceannate Corporation (formerly FMS Services), which provides various services under contract to the Education Department, also operates two other units, including one specializing in student loan debt collection.  So it's possible that if you somehow get behind on  your loans, it could be Loanlook's sister company that chases you for payments.

But Balaji Rajan, Ceannate's president and chief executive, said any concern that information given to Loanlook could somehow be used against the borrower by one of its other subsidiaries was unfounded. Ceannate's three subsidiaries are completely separate companies below the top executive level and can't use information given to one to assist another, he said. “Absolutely no data is shared or exchan ged between those companies,” he said.

He noted that many companies in the educational finance industry operate firms that work in different parts of the industry - say, making loans as well as servicing them and pursuing delinquent borrowers.

If  you are comfortable using Loanlook, you log in using the student aid PIN provided by the Education Department. Loanlook doesn't store the information when you use it, Mr. Rowland said. You must re-enter it each time you want updated loan information.

The site's dashboard provides a snapshot of your overall aid, including pie charts showing how much of the aid represents loans and how much is in grants, which don't have to be repaid; the total balance; and the average interest rate on the loans.

The site also lists the loans by amount, type and lender, and notes its status (in repayment, for instance).

A  potentially useful feature is the loan optimization tool. This gives you different scenarios, s howing, for example, how much you will save if you pay extra toward the principal, compared with a standard 10-year repayment plan. It's important to note, however, that Loanlook can't actually arrange your preferred payment plan for you. It's up to you to contact the loan servicer. And it's important that users do so, Mr. Rowland said, to make sure payments are properly applied. In most cases, without specific instructions, servicers simply apply extra payments to future monthly payments, rather than reducing the loan balance.

The site also offers a live chat feature, which connects users with counselors who can help answer questions about loans and repayment options. The overall idea behind Loanlook is to help students stay current on their loans by providing easily accessible information.  If you're behind on your loans, the site will direct you to contact your servicer to discuss ways to get back on track.

The site also offers a section on loan records, whic h allows you to upload documents like promissory notes so you can easily access them in one place. This section also includes contacts for the servicers of your loans and provides a space for you to include notes about your conversations with them. (So if, for example, a servicer agrees to a forbearance, you have a record of that call.)

The site includes, on each page, a snapshot of the total debt due, the date of your last payment and a running tally of the daily interest accrued.

The site is developing a tool aimed at helping high school students figure what sort of salary they might expect in different metropolitan areas after graduating with a certain type of degree, to see if they can afford the amount they're expecting to borrow. The tool is being fleshed out with additional economic data to broaden its usefulness, Mr. Rowland said.

Later this year, the site will add more functions, including the ability to make a loan payment. The site is free curren tly, but there will be a per-transaction fee added for users who want the payment capability.

Would you be comfortable using Loanlook?