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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.

YOUR COLLEGE/UNIVERSITY -- 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.

YOUR 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.

SERVICER -- 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 in writing.


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OCAP believes that financial literacy and understanding the financial aid process are critical aspects of college planning and student success. OCAP staff who work with students, parents, educators and community partners in the areas of personal finance education, state and federal financial aid, and student loan management do not provide financial, investment, legal, and/or tax advice. This website and all information provided is for general educational purposes only, and is not intended to be construed as financial, investment, legal, and/or tax advice.