Today, it is possible for parents, students and even schools to choose their higher education loan source by just contacting the congressmen in Washington. Student loans offered by the Student Loan People have been encouraging students in Kentucky to complete their college education and also provide jobs for many. Those who work and live in this State answer the queries of the borrowers.
Thousands of students in Kentucky have benefited from grants of millions of dollars over the years offered as a support to the grant programs of the state by the Student Loan People. Students and parents of all counties in Kentucky are visited by the outreach program funded by Student Loan People that is recognized on a national level. This program educates them about the importance of college education and how they can pay for college degree.
Other programs funded by the SLP include prevention programs, default management and financial literacy. Loans offered by the Student Loan People are offered through the FFELP or the Federal Family Education Loan Program and is therefore available to all Kentuckians.
This situation is all set to change with the 2009 budget proposal of the Obama administration. According to this proposal, all loan programs will be administered by the Washington DC Federal Direct Loan Program and therefore eliminates FFELP from 1st July 2010. Parents and students will continue to be offered loans but will not have a say in the provider and maybe will have to pay more. Default fees and origination fees charged on Federal Stafford Loans offered to students to pay for the Kentucky Universities and colleges will not have to be paid by the borrower as of 1st July 2009.
Borrowers who opt for the Direct Loan Program will have to pay these fees. This switch may be disadvantageous to students as they have to pay money out of their pocket. The impact will be felt to a great extent as it will add to the national debt; impact the default prevention programs and college outreach programs of the State and also increase unemployment.
Those who believe in the free enterprise and want to oppose government monopoly are encouraged to contact Washington Congressmen and put forth their strong feelings regarding elimination of any loan provider choice.
In the State of Kentucky, the secondary markets have been helping with the liquidity of FFELP. This is done by taking over the loans from educational lenders. This in turn results in offering of more student loans to fresh students. Kentucky secondary market is thus the largest student loan holders.
Loans are usually sold after the repayment starts. Banks are the predominant brokers for the secondary markets. Secondary market terms and conditions remain the same as the primary market. Repayment incentives are offered by the secondary market on the loans which include principal rebates and a reduction in interest rates for auto debit sign up and for making their monthly payments on a regular basis without default.