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If youÂ’re among the thousands of students whose student loans have been purchased by the U.S. government, you may have already gotten word. Starting July 1, the U.S. Department of Education (DOE) began notifying borrowers and their parents of the federal governmentÂ’s purchase of their loans.
If youÂ’re among the thousands of students whose student loans have been purchased by the U.S. government, you may have already gotten word. Starting July 1, the U.S. Department of Education (DOE) began notifying borrowers and their parents of the federal governmentÂ’s governmentÂ’s purchase of their loans.
Currently, the federal government now owns nearly 60 percent of all student loans, and these numbers may continue to climb if the economic situation does not improve. The DOE began purchasing student loans during November 2008 in an effort to decrease the amount of private investments tied up in Stafford, GradPLUS and ParentPLUS loans made to college students. By freeing up these investments, the government hopes to be able to continue providing the same number and dollar amount that students can presently obtain.
This wonÂ’t have a huge effect on students whose loans have been purchased by the U.S. government. The main concerns borrowers will face are changes in loan incentives and the location to which loan payments should be made. Borrowers should ensure that they receive notification of changes in payment location by keeping lenders updated with their current addresses. Alternatively, borrowers can enroll in automatic payment programs that allow the loan payments to be deducted from bank accounts each month. This resolves the problem of keeping lenders updated with change of address forms.
Another possible concern is that some loans have been purchased by the federal government, while other loans may not have been purchased. In these cases, borrowers may owe payments to more than one loan servicing agency. Again, communication with the lender will help to resolve this problem.
Although many major banking institutions, such as JP MorganChase, KeyBank, and Wachovia, have arranged with the U.S. government to sell their loans, a few major lenders, including Wells Fargo, continue to service their own student loans. As a result, some borrowers will lose certain discounts, such as a decrease in the loan principle, which may have been applied after the studentÂ’s graduation. Other students may have obtained a reduced interest rate, which would no longer apply if the loan was consolidated.
Stay smart. Know the terms of your loan, and stay updated concerning how these terms will be affected by loan sales or purchases. Remain aware of who owns your loan and how this will affect loan terms and incentives. Keep your address updated with the loan servicing agency to avoid defaulting because you donÂ’t get regular information about changes or payments due. Finally, stay tuned to http://www.degree.com the premier internet portal for online degree programs for the latest updates concerning changes in federal student loan procedures.
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