With Grad PLUS loans being phased out, graduate students and schools are facing new choices and considerations. While this transition brings some uncertainty, it also opens the door for schools to find new ways to guide and support students as they plan for their educational future. 

One practical way to help students through these changes is by creating a preferred lender list. This school-approved resource gives students and families a helpful starting point for comparing loan options, making the process less stressful and more transparent, all while staying compliant. 

In this guide, we’ll walk you through what a preferred lender list is, how it works, and how your institution can choose and evaluate lenders while staying transparent and compliant. 

Whether you’re starting fresh or updating your process, this checklist will help make the process clear, fair, and student focused. 

What is a Preferred Lender List? 

In simple terms, a preferred lender list is an arrangement between a lender and school where a school recommends the education loan products of a lender.  

These lists are governed by federal regulations that require schools to act in the best interests of borrowers, using objective and transparent criteria, and to maintain an impartial process that ensures students have diverse, unbiased options.  

Why Have a Preferred Lender List 

If you work in financial aid, you know that finding the right loan can be confusing and stressful for students and families.  

Here’s of few reasons why schools are using preferred lender lists to support this process: 

• They help students make informed decisions. By listing lenders who meet strict criteria for cost, service, and reliability, schools give students a trusted starting point to begin their search.  

• These lists encourage competition and better service among lenders. When lenders know they’re being compared side-by-side, they may be motivated to offer better rates, flexible repayment options, and responsive customer service. 

• The process puts students’ interests first. Federal regulations require schools to act in the best interests of borrowers. The list must be impartial, regularly reviewed, and open to feedback, so students always have diverse, unbiased options. 

• It streamlines counseling and support. Financial aid staff can answer questions more effectively when they’re familiar with the lenders on the list, making the process smoother for everyone. 

In short, a preferred lender list empowers students and families to make confident, informed choices about financing education. 

How to Create a Preferred Lender List  

Let’s explore how your school can build a preferred lender list that’s both effective and compliant, making the process straightforward for your team and supportive for your students. 

1) Define (and Document) Your Selection Criteria 

Before your school begins choosing lenders, it’s important to decide what matters most to your students and your school.  

There are several elements to consider, such as: 

Total Borrower Cost  

Look at the full financial impact for students, including APR ranges, origination fees, and rate caps.

For instance, as November 2025, Ascent offers fixed APRs ranging from 2.89% to 17.99% and variable APRs from 4.24% to 17.99%¹ and no fees. ² 

Comparing these costs helps ensure students aren’t surprised by hidden fees or unfavorable terms. 

Repayment Options and Flexibility 

Evaluate what repayment plans are available, such as deferment, forbearance, and income-based alternatives. Flexible repayment options can make a big difference for students facing financial uncertainty after graduation. 

Approval Rates and Average Time to Decision/Funding 

Consider how likely students are to be approved for loans and how quickly they can access funds. 

Co-signer Release Availability and Requirements 

Consider whether lenders offer a pathway to financial independence through co-signer release, and review what’s required to qualify. This feature is especially valuable for students who initially rely on family support to secure a loan but want the option to take full responsibility for their financial future as their circumstances and credit history grow. 

Data Security and Servicer Track Record 

Look for lenders who prioritize protecting students’ personal and financial information, using strong security practices and technology. It’s also important to consider the lender’s history as a loan servicer—choose partners with a proven record of reliability, responsiveness, and ethical practices. This helps ensure students receive consistent support and peace of mind throughout their borrowing experience. 

As your school goes through this process, be sure to document both your selection criteria and the rationale behind your choices. Careful documentation not only supports transparency and compliance, but also provides a clear record for audits, annual reviews, and any questions from students or regulators. 

2) Use Compliant Tools  

Platforms like FASTChoice  and ELM are widely used by colleges and universities to manage preferred lender lists. These tools help schools organize, present, and update lender options in a transparent and compliant way, making it easier for students to compare loans and make informed choices. They also streamline the process for financial aid offices, ensuring all necessary disclosures and consumer information are provided. 

3)Select Three to Five Private Lenders That Fit This Criteria — and Document the Process 

Evaluate potential lenders using your selection criteria and document the process to ensure transparency and compliance.  Many institutions begin with a list of three to five lenders so as not to overwhelm the students while still providing a few effective choices. 

Some schools develop separate lists for different student groups (undergraduate, graduate business, bar study, international, etc.), which can be more work but helps tailor support to specific needs. The goal is to provide a starting point for students who might otherwise be confused or frustrated by the process. 

During your selection process, be sure to follow a Code of Conduct that meets federal requirements for preferred lender arrangements. The NASFAA Code of Conduct is a trusted template that closely aligns with these legal standards and can help your institution stay compliant and transparent. 

4) Include Required Disclosures 

It’s essential for institutions to communicate openly with students about their loan options. Make sure students know they’re in control: they can choose any lender that fits their needs, whether or not that lender appears on your preferred list.  

If a student selects a lender not on the list, reassure them that their loan certification will be processed just as quickly and with the same care. 

By being transparent about these choices, your institution helps students feel confident and supported throughout the process, while also maintaining compliance with federal regulations. 

5) Train Your Financial Aid Staff 

When developing a preferred lender list, it’s crucial to train your financial aid staff so they can explain loan options clearly and effectively without steering students toward any particular lender. Staff should understand that every student’s choice must be respected, and that loan certifications for all lenders, whether on the preferred list or not, must be processed with equal timeliness and without prejudice.  

Regular training ensures staff are up to date on compliance requirements, disclosure language, and the importance of maintaining a neutral, supportive approach. This not only fulfills legal obligations, but also builds trust with students and families, reinforcing your institution’s commitment to transparency and fairness. 

6) Conduct an Annual Review of Your Preferred Lender List 

Building a preferred lender list is not a one-and-done task but is instead an ongoing commitment to your students’ best interest. An annual review helps ensure your preferred lender list continues to reflect your students’ needs and today’s lending environment. 

For compliance and transparency, maintain thorough documentation in an audit binder of your review. Here’s what to include: 

• Confirmation that at least two unaffiliated lenders remain on the list. This not only fulfills the NASFAA requirement but ensures students have real choices and aren’t limited to lenders with ties to your institution. 

• Recomputed selection criteria with current data and a date-stamp. Update your criteria using the latest information, so your list reflects today’s market and student needs. 

• Documentation of any adverse changes in terms or servicing. If a lender’s rates, terms, or service quality have changed for the worse, make a note and consider whether they still belong on your list. 

• Updated website and handbook disclosures, with archived prior versions. Transparency matters! Keep records of what you’ve shared with students and archive old versions for reference. 

• Reaffirmation of neutral processing and borrower-choice language. Make it clear that your financial aid office treats all lenders equally and that students are always free to choose the lender that works best for them. 

By following these steps, you’ll build trust, stay compliant, and make sure your preferred lender list truly serves your students year after year. 

Final Notes 

A preferred lender list is just one tool among many that schools can use to empower students and families on their financial journey. Every institution has its own unique approach, and what matters most is a commitment to transparency, student choice, and ongoing support. 

At Ascent, we’re proud to partner with schools that share our commitment to empowering students through clear, transparent loan options. 

About Ascent  

Ascent is a mission-driven fintech company committed to redefining student lending through a focus on access, affordability, and lasting economic impact. Backed by institutional capital, we offer innovative loan options for college and career training programs—helping more students qualify, with or without a cosigner.  But funding is just the start. From career readiness tools to financial wellness resources to over $355,000 in no-essay scholarships, everything we build is designed to turn education into real opportunity.  

Learn more about how we’re working to increase student income by $10 billion by 2028 in our Impact Report. 

Interested in seeing how Ascent compares to other lenders? Check out our comparison chart below and discover the benefits we offer to support your students. 

¹Annual Percentage Rates (APRs) displayed above are effective as of 11/01/2025 and reflect an Automatic Payment Discount of 0.25% on credit-based college student loans submitted prior to 06/01/2025, a 0.5% discount on credit-based college student loans submitted on or after 06/01/2025, and a 1.00% discount on outcomes-based college student loans when you enroll in automatic payments. Loans subject to individual approval, restrictions and conditions apply. Loan features and information advertised are intended for college student loans and are subject to change at any time. For more information, see repayment examples or review the Ascent Student Loans Terms and Conditions. The final amount approved depends on the borrower’s credit history, verifiable cost of attendance as certified by an eligible school and is subject to credit approval and verification of application information. Lowest interest rates require full principal and interest (Immediate) payments, the shortest loan term, a cosigner, and are only available for our most creditworthy applicants and cosigners with the highest average credit scores. Actual APR offered may be higher or lower than the examples above, based on the amount of time you spend in school and any grace period you have before repayment begins. Variable rates may increase after consummation. 

² Only Ascent college loans are eligible for no fees. Ascent career training loans are subject to a one-time origination fee of 5.0% of the loan amount. All Ascent loans are eligible for no application, disbursement, late, NSF or early payment fees.