Student Loan. It’s one of those phrases that gives you the willies just by saying it out loud. It’s also a phrase akin to “Beetlejuice” – say it too many times and the bill collector is likely to jump out of a mirror and grab your wallet. (Can you tell I’ve been watching horror shows lately? Bates Motel is a fave. Alas, I digress). The best way to protect yourself from these monster-esque debt collectors is to understand your student loan, as well as your rights. Grab your ax, its time to slay.
Let’s go back to basics: you first need to figure out the nature of your loan. The nature of your loan is either Federal or Private. If your loan was issued directly by the U.S. Government (Department of Education), then your loan is undoubtedly FEDERAL. If your loan was issued by a private banking institution (i.e. Sallie Mae, Wells Fargo, Discover, etc.), then your loan is PRIVATE. Simple, right? Not really. Here are some scenarios that require a little more investigation:
- You consolidated your loans. Consolidation means that you are taking two or more loans and turning them into one big loan. If you consolidated two or more federal loans through the federal consolidation program, congratulations (or maybe not), you still have a federal loan. If you consolidated two or more private loans, you still have a private loan. If you consolidated a federal loan and a private loan, you now have a private loan. (The federal loan consolidation program only permits you to consolidate federal loans together. Therefore, if you add any private loans, you now have a private loan.)
- You have a hybrid loan. This one is a little trickier. And it is also called an FFELP loan. An FFELP loan (described in more detail here) is usually a loan issued by a private institution, but has federal elements. For example, a Stafford loan is part of the FFELP program. Under the terms of these loans, the federal government pays for any interest that accrues while the loan is deferred. Grab your ax folks, the waters get murkier. Some of these loans are owned by the federal government (Department of Education) and therefore the federal government collects on these defaulted loans directly. Some of these loans, on the other hand, are owned by a private institution (i.e. Sallie Mae). FFELP loans that are owned by a private institution are assigned to a guaranty agency for collection. Visit this website to identify who owns your loan and determine whether your loan is federal or private (only federally-owned loans are listed here, so if yours isn’t here, it’s private).
Whew. This sleuthing was exhausting. Take some time to identify whether you have a federal or private student loan. Gather any paperwork you may have and scan or copy it for safekeeping. Write down your investigation notes. Create a file, and get ready to #slay your student loan throughout this series. Remember, if you ever need help understanding your student loan, reach out to an experienced consumer attorney (like me. duh.).
Please note that this article is for informational purposes only and does not create an attorney-client relationship, nor does this article purport to give legal advice. Everyone’s situation is different. If you have legal questions, you should contact a licensed attorney. Written by Shera E. Anderson, Esq. in Sunrise, Florida.