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  • 4m.

    Who's Who When Borrowing And Repaying Student Loans

    Whether you're borrowing federal or private student loans, different organizations (lenders, servicers, collection agencies, and more) play a part to ensure you receive and repay your money on time.
    Updated: October 21, 2015

    What You'll Learn

    • The difference between the FFELP and DL loan programs.
    • The relationship between lenders, servicers, and collection agencies.
    • Whom to contact if you have questions about your loan.
    A man looking at a laptop screen

    There are a lot of cooks in the student loan kitchen. Let's shed some light on whom all these organizations are, so you know where to go if you need help.

    Different Programs

    Federal student loans, such as Stafford loans and PLUS loans, fall into two main programs—the Federal Family Education Loan Program (FFELP) and the William D. Ford Federal Direct Loan (DL) Program. Their biggest difference is that:

    • With FFELP, students borrowed from a private lender.
    • With DL, students borrow directly from the U.S. Department of Education (ED).

    All loans borrowed as of July 1, 2010, are through the DL program. Pre-July 1, 2010, loans could have been through FFELP or DL. You can find out which program your loans came from by accessing the National Student Loan Data System (NSLDS®). NSLDS lists all of your federal student loans and who holds them. If you have a guarantor and a lender listed for a loan, your loan was a part of FFELP. If you only have an ED servicer listed, your loan is a part of the DL program.

    Perkins loans are another type of federal student loan. Your school administers this program, not FFELP or DL. However, you can still find these loans in NSLDS as well.

    Key Student Loan Players


    The financial aid process always starts with your school. The financial aid office determines your eligibility for aid and awards your federal student loans. Once you've accepted the loans, the school will originate them and schedule your disbursements (how much of each loan you receive at a time and when).


    Within the DL program, loan funds come directly from ED. When your school schedules loan disbursements, ED sends the money directly to the school, which then credits it to your account. FFELP loan funds would have come from a private bank (though it's possible that your loan was or could be sold to another lender or to ED). For Perkins loans, your lender is also your school—it assesses your eligibility for these loans, awards them, and provides the funds.

    In any case, all of these lenders provide you with federal student loans, which are eligible for benefits such as deferment, forbearance, discharge, and forgiveness.

    If you need to borrow private student loans, you apply for them on your own—the school does not facilitate the process for you (they just certify that the loan amount won't be higher than your cost of attendance). The loan funds for your private student loans come from a private bank—your lender. They disburse your loan, and you are subject to their terms and conditions, so make sure to read them carefully.


    Your lender may provide the money, but they probably won't send you bills—they often outsource that responsibility to organizations known as servicers, who collect loan payments and provide customer service on your lender's behalf. Contact your servicer if you have questions about your bill or repayment options, or when your address or personal information changes.

    Collection Agency

    If the worst happens and your student loans default, your lender or your servicer may hire a company that specializes in collecting delinquent or defaulted loans. These collection agencies must still follow all federal student loan collections rules. For instance, you would still be eligible to rehabilitate or consolidate your student loans out of default to get them back in good standing.

    Guarantor (FFELP Loans Only)

    Nonprofit or state organizations called guarantors or guaranty agencies work with your lender, servicer, school, and ED to help ensure that you successfully repay your FFELP loans. If your student loans unfortunately ever go into default (become 270 days past due), your guarantor takes ownership of your defaulted loans to help you get them back on track.

    Talk To Salt

    If you have questions about these organizations or encounter any difficulties repaying your loans, contact Salt®. No matter which program originated your loan, we can work to help you.

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