If you are looking for a Loan, there also other organizations and institutions, such as banks, credit unions, savings & loan associations, which offer funds to students, parents and private loans. Also, there are tons of organizations, either offer loans directly or originate loans through other lenders.
A student loan that is offered by lenders in a percentage correspond 83.5% to FFELP loans and 93.9% to FFELP loans. When you are going to choose for a lender, ensure to find the best and with the right code.
These organizations follow a specific process, and ask for the support to other types of organizations, which are able to manage the loans.
1.5.1 Education Lenders:
As the name indicates, these are institutions that offer student loans such as Federal Stafford Loan, Federal PLUS Loan, Federal Consolidation Loan, private education loans, private consolidation loans.
Also, some of these institutions are the secondary markets and guarantee agencies, offering discounts to generate more attractions.
1.5.2 Guarantee agencies:
Even when Government Students Loans are safe with almost no risks, the Private Students Loans are extremely unsecured, that is the principal reason why exist Guarantee Agencies.
These agencies support the students giving them guarantee against default protecting to the student loan guarantors.
Depending on the agency, usually on each disbursement, 1% default fee goes to the guarantee agency to pay for the costs of the loan insurance.
According to the politics, if the borrower defaults, dies or becomes completely disabled, the balance remaining is paid back to the lender by the agency.
1.5.3 Secondary markets:
A Secondary Market is an organization that ensures the liquidity of the Federal Family Education Loan Program, because it buys all the possible student loans from education lenders.
Known also as “holders”, gives new opportunities to education lenders, which receive capital to generate more loans. Between lenders isn’t rarely the sell of loans, besides the bank participate receiving the money from the borrowers. It is very usual to sell a loan when it starts with the repayments, and once it has been sold, its terms and conditions do not change.
However, these loans offered by the Secondary Markets, have repayment incentives, such as rebates and interest rate reductions anytime the borrower either, sign up for an automatic direct debit or make consecutive payments per month and on time.
A Servicer is a company which work is collecting payments, responding to customer’s questions, and performing administrative tasks associated with the loan file.
The principal activities that they have to carry out are:
- Pay loans funds out.
Once the loan is sold, either by servicer’s changes or by Secondary Markets or Banks, it has to keep their original terms, and in some cases would change the address and the date of payments.
- Ensure the proper use of the loans while borrowers are in school.
- Accumulate payments.
- Determine and care for postponement loans.
- Answer questions.
- Update loan records.
- Ensure the loans process guarantying that they fulfil the federal regulations and requirements.
Never forget to read the letters or correspondence you would receive at home; also keep updated your file if you change your address or any other information, otherwise you could be took for a delinquent.
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