When Student Loans Are Sold: What Borrowers Should Know
"Federal student loans were previously made through the Federal Family Education Loan Program (FFELP) or the federally-guaranteed student loan program, which was eliminated in 2010," Fox Business reports. "Under FFELP, lenders often sold loans to a secondary market or combined them into larger securities and sold them as securitized assets in order to raise capital to make new loans, according to Haley Chitty, spokesperson for the National Association of Student Financial Aid Administrators. … Now all federal loans are available through the Direct Loan Program under the Department of Education, contracting additional servicers to handle increased loan volume, says Chitty. Although all new federal loan borrowers should only have one servicer in the future, here’s what students and grads with existing loans need to know when their loan is sold."
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