These suggestions, based in part on guidance contained in the May 2005 “Guide to Developing a Preferred Lender List” from the National Association of Student Financial Aid Administrators, are intended to help you effectively document that you selected your school's preferred lenders in a thorough and objective manner.

Step 1: Set firm dates for when the evaluation process will begin and end

When your school has clearly defined and articulated start and end dates for the review process, all lenders have an equal opportunity to present their case for inclusion on your preferred lender list.

Step 2: Develop a questionnaire asking lenders about their capabilities on a wide range of criteria

The questionnaire should ask details about areas such as lender experience, borrower benefits, the company’s longevity and financial strength, customer service, repayment, and investment in technology. It is beneficial to assign a priority (numerical value from 1–5, 5 being the highest priority) to the criteria so lenders understand how they will be evaluated up front.

Separate lists are recommended for federal loans and private loans. Here are sample federal lender list best practies (PDF, 16KB) and private lender list best practices (PDF, 16KB) that can help you develop questions.

Step 3: Create a benefits comparison chart

Because borrower benefits are critical to the affordability of the loan, you could create a borrower benefits chart (PDF, 24KB) that isolates the benefits offered by each lender and allows them to easily be compared on the basis of price and value.

Step 4: Design a matrix to evaluate each lender

The lender comparison matrix (PDF, 26KB) could be used to objectively assign numerical values of 1–5 for the assessment of each lender on each of the performance criteria based on their proposals. An overall weighted score could then be derived by multiplying the lender assessment for each criterion by the weighted priority.

Step 5: Create a broad-based committee to evaluate the results

A highly inclusive committee will help ensure an objective evaluation process.

Step 6: Inform all selected lenders in writing

Let your preferred lenders know that they have been selected so they can make sure all systems are in place for a successful and smooth loan process with your school.

Step 7: File the documentation for reference

Having documentation on file will help you reference clearly your selection process and validate your selections as well as provide background for future lender evaluations.

When listing your preferred lenders on your website and in printed materials, please remind borrowers that they are free to choose a lender that is not on the preferred lender list.