...but I have read that student loan xpress has been illegally paying colleges money to get loans
Good question.
When I wrote that post, I had not seen the news stories on this topic and had not known about the history. I was as surprised as everyone else to see it.
It is important to note that the problem is with new student loans (that get funding while a student is in school), not consolidation loans (which happen after graduation and are a private - but federally guaranteed - loan), which is what we have been recommending them for.
When we first started working with financialaid.com they were an independent company. In the interim they were purchased by CIT and folded into the studentloan xpress branch (which, if I understand things correctly was also a recent purchase of CIT). CIT is a major financial firm that has a portfolio in excess of $74 billion, so it is highly motivated to keep all its dealings above board. They fund their own loans and are, generally, a good company.
I started working with financialaid.com because they had good deals for students. The interest rates were at or lower than competitors, and they gave students up to $2000 back when they consolidate. Giving money to students is very different than paying financial officers and colleges. So, it seemed (and still seems) that this a good deal for students.
The problem, as I understand it, is that they were paying schools to be on their preferred list, and most students rely on their schools for loan companies, so the company had little competition. I don't know what the deals were.
In the last two weeks I have been debating whether to keep student loan xpress on our list. They still have potentially the best deal for students (when you don't go through your school) and I've never had a complaint about them.
However, I sure don't like having to defend my decision to work with them, and I blame them for that - and I certainly DO NOT approve of their practices with paying schools. As I read more on this topic it seems clear that paying schools to be on a preferred list is widespread in the industry, but is illegal, so that's not good.
I recommend that every person considering consolidation should do comparison shopping. Find out where the best loan is, what the best terms are, and whether the company is there for the long haul.
So, here's the question to studentdoc members. Should we keep student loan xpress on the recommended list? Take a look at the loan they offer, and that of competitors, and make a recommendation. If 20 or more current members vote on this, we'll abide by the user's decision.
Student Loan Xpress Poll