The Players in the Student Loan Process
YOU -- You are responsible for repaying your loan according
to the terms of the promissory note you signed when you took out the loan.
The promissory note is a binding, legal document.
-- The post-secondary institution you plan to attend develops your financial
aid package, including Direct Loans, based on the information
you provided on your Free Application for Federal Student Aid (FAFSA). In
addition, your college or university also certifies your student loan applications
and monitors your enrollment status. The financial aid office at your college
or university is an excellent source of advice and information about your
loan, lender, guarantor and servicer.
U.S. DEPARTMENT OF EDUCATION
(USDE) -- The USDE is the federal agency that oversees the Federal Family
Education Loan (FFEL) program and administers the William D. Ford Federal
Direct Student Loan (Direct Loan) program. The USDE sets the loan program
regulations, requirements and defines eligibility criteria for both programs.
LENDER -- The financial institution that loans you the money to go to
school is your lender. Effective July 1, 2010, all new loans will be made
by the U.S. Department of Education under the Direct Loan Program.
-- Lenders sometimes contract with a servicer to manage their student loan
accounts. The servicer becomes your primary contact for questions and loan
repayment, but do not own the loan.
SECONDARY MARKETS -- Sometimes
a lender will sell a loan to a secondary market, which then becomes the holder
of the loan until it is repaid. This allows lenders to continue to provide
funds for future loans. If your loan is sold, your lender will notify you