STUDENT LOANS 411

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Can I find out what type of loan I have?

The National Student Loan Data System (NSLDS) provides borrower’s with information about their federal student loans.

Tell me what type of Federal Loan do I have.

I don’t know the difference between government and private loans.

Explain the difference between the two federal loan programs (Direct and FFEL)?

The Department of Education (without the involvement of a private entity) directly makes loans to students through William D. Ford Direct. In the Federal Family Education Loan program (FFEL), the loans made by private lenders with a government subsidy that guarantees these loans in case of student default. FFEL is also known as the guaranteed loan program. The terms and conditions of these loans are similar; however, there are some differences in the repayment options.

Tell me more about the two federal loan programs (Direct and FFEL).

Explain the difference between private and federal loans.

Private loans are unsubsidized and unregulated, generally carry a variable interest rate and come with limited repayment options. Federal loans, provided by a private lender or directly by the Department of Education, are subsidized and regulated by the federal government. Federal loans also carry a fixed interest rate. Borrowers should try to utilize their federal loan options before considering private loans.

Why do private loans cost more than federal loans?

In the case of private loans, loan limits, conditions, terms and the interest rate are determined by Banks and lenders. Private loans also typically carry a higher, variable interest rate without the flexible repayment options guaranteed by federal loans.

Do I qualify for federal student loans?

It depends on your citizenship and your educational goals. To qualify you must be enrolled in a degree, certificate, or other approved program at an eligible school and you must be a U.S. citizen or eligible non-citizen. Additionally, you must have a high school diploma or hold an equivalent as approved by the Department of Education.

IMPORTANT NOTE:  If you have been convicted under federal or state laws of sale or possession of illegal drugs you are ineligible.

I need more information on how to qualify for federal student loans

What does a guaranty agency do?

Guaranty agencies administer the federal guaranteed loan program. They are either state or private nonprofit agencies. They are responsible for insuring federal student loans against default. In the case of default, they pay off lenders and try to collect from borrowers.

Tell me more about Stafford Loan.

Stafford Loans Terms and Conditions

Tell me more about Perkins loans.

Perkins Loans Terms and Conditions

Tell me more about HEAL loans.

HEAL Loans Terms and Conditions

Is good credit score necessary to qualify for Student Loans?

With the exception of PLUS loans, the government does not consider your credit history when deciding your loan eligibility. Private loans, however, require a credit check and the interest rates on private loans are based on your credit score.  Tell me more about private loans.

Should I consolidate?

There are many aspects to consider when deciding to consolidate. Consolidation reduces and simplifies monthly payments by rolling multiple loans into one loan, and one single payment. Additionally, it extends the period of repayment, and increases the amount you will pay over the life of the loan with added interest.

Tell me more about the pros and cons of consolidation.

Will I be able to consolidate with the government more than once?

The government allows consolidating loans more than once in only a small number of cases. This includes instances where you have new loans to consolidate that were not included in the first consolidation loan, if you are in default on a Federal Family Education Loan (FFEL) consolidation loan or if you  apply to the public service cancellation program.

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Is it a smart choice to apply for a private consolidation loan?

Consolidating your private loans into a fixed private consolidation loan may be a good option if the rate offered is lower than your private loan rate. But use caution when consolidating federal loans into a private consolation loan. When you consolidate your federal loans through a private consolidation loan, you lose your rights under the federal loan program.

With the economic down turn and the “credit crunch” will I still have student loan options?

You can still qualify for federal loans. If you’ve previously borrowed through a private lender, they might now be able to lend to you again this year. Your guaranty agency might also tell you that you cannot rehabilitate because of the lack of buyers for your loan. If you fall into that position, it will not disqualify you from federal loans; however, you will have to select a new private lender. Private lenders have increased their credit requirements so borrowers with poor credit or no co-signers will likely be denied private loans. Private lenders have also begun eliminating their federal consolidation loans as well but you may still use the federal Direct Consolidation Loan Program.