Iowa College Student Aid Commission

Who's Who In the Loan Process?

Finding your way through the student loan process can be confusing. There are several different parties involved in the loan process. Understanding who they are and what they do will help make repayment easier for you.

U.S. Department of Education (USDE)
The U.S. Department of Education (USDE) oversees the Federal Family Education Loan (FFEL) Program and administers the William D. Ford Federal Direct Student Loan Program. The USDE sets the loan program regulations, requirements, and defines eligibility criteria for both programs.

College and Universities
The financial aid office at the college or university that you attend determines your eligibility for financial aid, including Stafford Loans, based on the information that you provided on the FAFSA (Free Application for Federal Student Aid). Your college or university also certifies your loan application and monitors your enrollment status.

Guarantor
Guarantors are state or non-profit private agencies authorized by the U.S. Department of Education to administer the FFEL Program in each state. Guaranty agencies insure (or guarantee) the repayment of student loans by agreeing to reimburse lenders for loans that default (are not repaid) or are forgiven due to death, permanent disability, or are eligible for other federal loan forgiveness programs. They also provide program support services and resources. The Iowa College Student Aid Commission (Iowa College Aid) is the designated guaranty agency in Iowa.

Lenders
Lenders may include banks, credit unions, savings and loan institutions, and other companies who provide the money for your student loans. You may work with some lenders through the life of your loan, while others may sell your loan to a secondary market or use a servicer for loan servicing.

Loan Holder
The term loan holder refers to the lender that currently owns your loan. Your original lender and your current loan holder could be different since some lenders sell their loans. To find out who holds your loans, visit NSLDS (National Student Loan Data System).

Secondary Markets
Secondary markets purchase loans from lenders. This allows lenders to continue to provide funds for future student loans. While your loan holder may change, the terms and conditions of your loan will not. Iowa Student Loan is the designated secondary market for the state of Iowa.

Servicers
Servicers administer loans on behalf of lenders and secondary markets. They become your primary contact for questions and repayment, but do not own the loan.

Direct Loan Servicing Center
The Direct Loan Servicing Center collects payments, grants deferment or forbearance requests, and helps students with Direct Loans select or change repayment options.

Federal Student Loan Programs
Stafford Loans are administered under two student loan programs: the Federal Family Education Loan Program and the Direct Loan Program. Your school may participate in one or both of these programs.

Federal Family Education Loan (FFEL) Program
Loans are funded through lenders and guaranteed by a non-profit private or state guaranty agency such as the Iowa College Aid. Your primary contact during repayment may be your original lender, a designated secondary market, or a servicer that administers loans on behalf of lenders and secondary markets.

Direct Loan Program (Direct Loan)
Loans are funded through the federal government. Your primary contact during repayment will be the Direct Loan Servicing Center.

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