What is the single lender rule? Well, according to the single lender rule, if you are a student and you ask for a student loan, your request is sent through to the Department of Education which will decide who your lender will be. This action leaves you with very few options. Students are often stuck with one lender, due to the single lender rule, a rule that has many disadvantages.
At first sight it may seem like a good idea to have only one lender to hold all of your student loans, but theres more to the single lender rule than it appears. First of all, according to the single lender rule you are forced to consolidate with one lender, the one that holds all your education loans, and this could cost you a lot of extra money due to the fact that you have no options regarding better interest rates and better fees. Secondly, the single lender rule gives your lender the possibility to offer you poor services and uncompetitive rates. The lender is protected from competition as stated in the single lender rule. That means that according to the single lender rule you do not have the option to change you lender or to look for better services somewhere else.
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