What are Federal Student Loans?
Copyright 2012 Professional Student Loan Solutions, Inc.: Defaulted Student Loans. All Rights Reserved.
Professional Student Loan Solutions, Inc. provides services for both Federal and private student loans. Federal student loans are loans that are guaranteed by the Federal Government. Private student loans are issued by financial institutions based on a strong credit history of the student and/or require a co-signer with a strong credit history. Generally, neither Federal or private student loans can be discharged in bankruptcy.
Federal student loans and private loans are available to students to help pay for their education. Federal student loans have lower, fixed interest rates, generous repayment plans, no prepayment penalties and no credit checks (except for PLUS Loans).
In contrast, private loans, which may be aggressively marketed to students through TV ads and other media, are substantially more expensive than federal student loans. They generally have higher, variable interest rates that may substantially increase the total amount you repay. The interest rate you receive might depend on your credit score. Private loans can also have prepayment penalty fees.
If your bank or other private lender provides loans that are backed by the federal government, then they are participating in the FFEL program. Be sure to ask if they do. Documents for a federal student loan will state somewhere on the form that it is a federal student loan. Some private student loan lenders have forms that look similar to the federal forms and might confuse some students.
*From the booklet "Your Federal Student Loans" provided by the US Department of Education.
Although there are several ways that we can help you get your defaulted Federal student loans back into good standing, there are currently no such options for private student loans. In other words, once a private student loan is in default you cannot get it back out of default and must work on paying it off until it is paid in full. However, we have extensive experience in working with private loan creditors and collectors. We can create workable repayment plans, usually stopping the litigation process and collection activity.
It is essential to address and resolve all student loans as neither Federal or private loans can be discharged through bankruptcy except in very rare circumstances.
Are your student loans Federal or private?
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