SSome lenders include origination fees in their student loans which could end up surprising borrowers when they receive less money than the total amount borrowed, or mislead them when comparing different student loan options.
To assess them, one must first understand what the origination fees are in a student loan.
What are the origination fees in a student loan
Student loans have costs assessed by lenders when they originate or process a loan, this is called origination fees.
The original fees can be found at federal student loans as well as some private student loansand this means that a loan fee is deducted proportionately from each loan disbursement, which means that you actually receive less than the amount you actually borrow.
But a student who has taken out one of these loans will also have to repay the origination fee, as students are responsible for repaying the entire amount accrued in the loan.
Naturally, the origination fees will also generate interest, and a new student loan will also mean that you will have to pay new origination fees on the new amount borrowed.
So even a small set-up fee could prove devastating by increasing your costs over time.
Difference Between Federal and Private Student Loans
In private student loans Origination fees vary by lender, some may charge them and some may not, with some calling them by a different name like application fee or disbursement fee.
Federal student loans have assembly fees after Congress enacted them, but this varies according to the type of loan that has been contracted.