Guaranteed Student Loans
If you want to do financially well in your life, you definitely require a college education to achieve high-paying jobs. However, college education may require finances beyond your family’s income so you may have to look for outside help. In this avenue, federal financial aid is on top of the list. The federal government has not only arranged grants and work-study programs for deserving students but has also provided guaranteed student loans in the form of the Stafford Loan Program. Since 2010, however, there are no more government guaranteed student loans as the department of education is paying these loans directly without any third party lender involved.
This change has no effect on already disbursed loans through the previous guaranteed student loan program. All students who were disbursed loans through the Stafford Loan program before 2010 have to continue making payments to their respective private lending organizations. Same is true for PLUS loans, another example of guaranteed student loans before the act of 2010, which were given to the parents of students.
According to the new act of 2010, there is no need for federal government’s guarantee in student loans as Stafford Loan and PLUS loans are given by the department of education without any private lender involved in the process. However, your point of contact may still be a private organization working on behalf of the department of education to provide loan service.
Guaranteed Private Student Loans
Now, that the concept of federal guaranteed student loans is obsolete so we come to private student loans guaranteed by organizations other than the federal government. In fact, some private loan programs may require a third party guarantor for loan approval. The third party guarantor is needed to guarantee the payment of loan if the borrower fails to pay on time. However, it is difficult to find private organizations willing to provide insurance for student loans. The Educational Resources Institute (TERI) is one example of an organization that provides guarantee for private student loans. However, this guarantee comes at a price; a fee is added to the loan amount.
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Q:Is guaranteed student loan program option safer?
A:Guaranteed student loan program is a safe choice as it comes with assurance from the lender. The lender takes the responsibility to ensure loans are paid back therefore no detailed credit check is required for such loans. The lender can be the federal government or a private institute, bank etc that gives the loan to the student.
Q:Can you please name some government guaranteed student loans?
A:Government Guaranteed Student Loans are loans offered under the federal financial aid program. These include the Perkin loans, Stafford loans, and Parent PLUS loan programs. You can find more information about these loans by browsing through our website. We have detailed information about each one of these stored for you.
Q:What is meant by guaranteed student loans?
A:Guaranteed student loan refers to those loans in which a third party is involved for loan payment process. First some of the federal loans were guaranteed student loans but after 2010 this changed and now federal loans are given directly to the deserving students without the involvement of any third party.
Q:What happened to guaranteed private student loans?
A:The term 'guaranteed' refers to the fact these loans were made b y third parties lenders, such as banks, but the loans were guaranteed. These were abandoned in 2010 as it was felt by the current Administration, the banks were benefitting from a Federal Government guarantee , but not necessarily use this guarantee to make affordable loans.
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