Guarantors and Lenders

A Guarantor or Guarantee Agency verifies your eligibility for a particular federal loan program and provides the insurance for those loans. If you do not repay your loan, the guarantee agency will pay the lender with funds received from the federal government and collect the balance directly from you. Monash University works closely with American Student Assistance (ASA) and they provide a free guarantee service.

Applying for your Federal Stafford Loan through a Guarantor usually results in a quicker turn around time than applying directly to a lender. Alternatively, you may wish to apply through your U.S. state guarantee agency.

A lender actually provides the loan funds. The lender may be a bank or other financial institution. The lender sends the money to the university. This money is applied first to any balance due on your student account. Any excess funds are given to you. The lender may sell or transfer your loan to another lender. When this happens, you will be notified by the lender and the new loan holder. The terms of your loan will not change if your loan is sold or transferred.

Many banks, savings and loan associations and credit unions participate in the FFELP. A good starting point in finding a lender is to check if your own bank participates in the FFELP. EDFUND have a comprehensive online database of participating lenders. Remember to ask for the lender code when you find yourself a lender.

Your lender provides you with a disclosure statement before or at the time your loan is disbursed. This document states the amount of your loan (principal), and any fees deducted from the principal. It also discloses the interest rate, the annual percentage rate, and an estimate of the total amount you will have to repay (including the total amount of interest based on a Standard Repayment plan). Be sure you receive this from your lender and keep it in your files.

If you received Stafford loans previously, you may wish to stay with the same lender. However, it is wise to shop around for a loan to make an educated decision. Be sure to ask about interest rates, repayment plans, repayment incentives, customer service, economic hardship policies, one-time capitalization and likelihood of your loan being sold.