You
You
You are the borrower-and ultimately
responsible for repaying your student loan according to the terms
outlined in the Master Promissory Note you signed
when you accepted the loan. This promissory note is a
binding legal contract that details your repayment
obligations, interest rates, and other important loan terms.
By signing it, you've agreed to meet those
terms, even if you don't finish your program, can't find a job
right away, or are dissatisfied with the education you
received.
Your College/University
Your College/University
The college or university you plan to attend
creates your financial aid offer-including any
Federal Direct Loans-using the information from your FAFSA. Your
school is also responsible for certifying your student loan
eligibility and submitting that certification to the U.S.
Department of Education.
In addition, your school monitors your
enrollment status (such as full-time, part-time, or
withdrawn) and reports changes to your loan servicer, since these
can affect your financial aid and repayment timelines.
U.S. Department of Education
U.S. Department of Education
The U.S. Department of Education's
Federal Student Aid (FSA) office oversees the
federal student loan system. All new federal student loans are made
through the William D. Ford Federal Direct Loan
Program. FSA sets the rules, eligibility criteria, and
repayment terms for these loans. It also manages federal financial
aid processing, administers aid programs, and ensures schools and
loan servicers comply with federal law.
Your College/University
Your Lender
For federal student loans,
the lender is the U.S. Department of Education, which issues all
new loans through the William D. Ford Federal Direct Loan Program.
You borrow directly from the federal government, and your loan is
serviced by a company contracted by Federal Student Aid (FSA).
For private student loans,
the lender is usually a bank, credit union, state-based agency, or
other private financial institution. These loans are not funded or
guaranteed by the federal government, and terms, such as interest
rates, repayment options, and borrower protections, are set by the
lender.
Servicer
Servicer
A student loan servicer is the company or
organization assigned to manage the repayment and administrative
tasks for your student loan on behalf of the lender or the U.S.
Department of Education. The servicer is your main point of contact
for questions, billing, and repayment-but they do not own
your loan. The lender (such as the U.S. Department of
Education for federal loans) still holds the loan, while the
servicer handles the day-to-day management.
Secondary Markets
Secondary Markets
If you have a private student loan, your
lender may sell it to a secondary market buyer - think of them as a
"loan buyer" - so they have more money to lend to other students.
The new owner of your loan is called the loan holder, and they'll
keep your loan until it's paid off or sold again. This generally
doesn't happen with federal loans, since the U.S. Department of
Education holds those directly rather than selling them.
If your loan is sold, both your original
lender and the new holder are required to notify you in writing.
Your loan terms, such as interest rate and repayment schedule, will
not change when the loan is sold.