Government Owning Student Loans - What?
S.
government, you may have gotten the word, by now.
As of July 1, the U.
S.
Department of Education (DOE) began informing borrowers and their parents of the federal government's acquisition of their loans.
At present, the federal government now possesses almost 60 percent of all student loans, and these figures may continue to mount if the economic scenario does not get better.
The DOE began buying student loans during November 2008 in an attempt to reduce the amount of private investments tied up in Stafford, GradPLUS and ParentPLUS loans made to college learners.
By releasing these investments, the government expects to have the ability to continue offering the same number and dollar amount that students can currently get hold of.
This won't exceedingly influence students whose loans have been bought by the U.
S.
government.
The main worries haunting borrowers are changes in loan incentives and the location to which loan payments are supposed to be made.
Borrowers should make sure that they get notice of changes in payment location by updating lenders with their present residence.
On the other hand, borrowers can get enrollment in automatic payment programs that enable the loan payments to be subtracted from bank accounts every month.
This solves the problem of updating the lenders regarding any change in the address.
One more likely issue is that some loans have been bought by the federal government, whereas other loans may not have been bought.
In such cases, borrowers may owe payments to more than one loan servicing organization.
Once more, getting in touch with the lender will play a role in resolving this issue.
Even though, a number of major banking institutions, including JP MorganChase, KeyBank, and Wachovia, have agreed with the U.
S.
government to put up their loans for sale, some of the major lenders, such as Wells Fargo, carry on servicing their own student loans.
Accordingly, a few borrowers will be unable to find some discounts, such as a reduction in the loan principle, which may have been applied after the completion of a student's graduation.
Other students may have gained a decreased interest rate, which would no longer apply if the loan was combined.
So, stay updated.
Get complete knowledge about your loan terms, and stay smart regarding how these terms will be influenced by loan sales or purchases.
Be confident of who owns your loan and what effect this will have over loan terms and incentives.
Maintain the current status of your address with the loan servicing agency to keep away from defaulting because standard information about changes or payments due isn't discovered everyday.