Our system of access to higher education is debt based. Want an education? Buy it. Don’t have enormous piles of money lying around? Borrow it. Trying to make good decisions about the best options for paying back that money you borrowed? Good luck!
In order for a student to understand his or her options and make good decisions about how best to repay student loans, the first thing every borrower must do is understand exactly what kind of student loans he or she has. Basic things about your loans—like what kind of student loans you have, are important.
It can’t be too hard to figure out what kind of loans you have, right? Wrong.
I am a fairly smart cookie. I have loads of education, even a law degree cum laude (Latin! That must mean I’m smart). I’ve got 13 years’ experience as an attorney handling tricky stuff like complex federal habeas corpus litigations (more Latin!). For more than half a dozen years, I’ve spent my days deciphering student loan repayment and student debt relief programs.
For example, most folks know that there are federal student loans and private student loans. That’s a start, but it’s more complicated than that. If you’re borrowing federal student loans right now, you’re getting Federal Direct loans. Federal Direct Loans come straight from the federal government; no big surprise there. But it’s more complicated than that.
Lots of borrowers also have student loans from private lenders. Would you guess those are private student loans? Not necessarily! Some federal student loans, instead of coming straight from the government, were “originated” by private lenders. Those are called FFEL, or Federal Family Education Loans. If FFEL and Federal Direct Loans were the same, we wouldn’t have to care. But they aren’t the same, there are key differences that matter to student loan borrowers, and it’s important to know whether you have federal student loans that are FFEL or Federal Direct Loans or whether you have both.
And it’s more complicated than that.
There are the Federal Direct Loans you may have consolidated with a FFEL lender. And the FFEL loans you may have consolidated with Federal Direct. And the federal loans (whether FFEL or Federal Direct) you may have consolidated into a private consolidation loan.
Complicated enough for you? I’m just getting warmed up!
A number of FFEL loans (those federal student loans that were “originated” by a private lender) were sold by those private lenders to the federal government. Hm. Does that mean they are Federal Direct Loans now? Um, no. And yes, it matters. Oh, and Federal Direct Loans (the ones that aren’t originated by private lenders) are likely to be “serviced” by a private student loan company. Do what?
Want to talk about Perkins loans which are kind of federal but not exactly since they are distributed by schools? How about “school as lender” loans? No?
But we haven’t even figured out what kind of student loans you have yet! And only after we figure out what kind of loans you have can we look at your repayment options. Plus there’s deferment, and forbearance, and this and that, and some other things, and…
Financial aid and student loan repayment are overly complicated.
I dedicate my professional efforts to providing clear information for student loan borrowers and the people who love them. Over the years I have developed a pretty solid foundation of knowledge upon which I can build, but by no means do I have all the answers. I have made a career of figuring this nonsense out and repackaging it into something borrowers can use. A number of other dedicated advocates do this too. I am passionately dedicated to my work, because I know firsthand how difficult a student loan burden can be.
I work hard to improve my understanding of student loan law—every single day. I do it because that’s what it takes to get a handle on this stuff.
That’s just wrong.
*no offense to rocket scientists; I love rocket scientists.