Most student loans — about 92.4% — are owned by the government.
The loan holder of a Direct Loan is the U.S. Department of Education. A loan servicer is a company we assign to handle the billing and other services on your federal student loan on our behalf, at no cost to you.
The office of Federal Student Aid is responsible for directly managing or overseeing an outstanding federal student loan portfolio comprised of billions of dollars in Title IV loans and representing millions of borrowers.
If we transfer your federal student loans from one servicer to another servicer, your loans will still be owned by ED. The “transfer” to another servicer simply means that a new servicer will provide the support you need to fully repay your loans.
Student loans are owned by the federal government or private institutions, depending on the type of student loan. Federal student loans are owned by the U.S. Department of Education while private student loans are owned by the financial institution that granted them.
Review the loans that have an outstanding balance. If the name of the loan's servicer starts with “Dept. of Ed” or “Default Management Collection System,” that loan is owned by the U.S. Department of Education.
The federal government began guaranteeing student loans provided by banks and non-profit lenders in 1965, creating the program that is now called the Federal Family Education Loan (FFEL) program.
The focus of federal student loan programs is on enabling students to pay for a college education and not to provide profit to the federal government.
Today's student debt problem can be traced to the 1960s, when California Gov. Ronald Reagan cut higher education funding and raised tuition. Once considered a public good, higher education became seen nationwide as a private commodity.
For Direct Loans, the lender is the U.S. Department of Education. If you have a FFEL Program loan, the lender may be a financial institution such as a bank or credit union. If you have a Perkins Loan, the lender is the school where you received the loan.
The office of Federal Student Aid (FSA) provides approximately $120.8 billion in grant, work-study, and loan funds each year to help students and their families pay for college or career school.
In most cases, your child's school will give you your loan money by crediting it to your child's school account to pay tuition, fees, room, board, and other authorized charges. If there is money left over, the school will pay it to you.
Who has the most student loan debt by race? Black adults are more likely to have student loan debt than those in other racial or ethnic groups. They are more likely than white adults to hold student debt at every level of educational attainment.
About 75% of student loan borrowers took loans to go to two- or four-year colleges; they account for about half of all student loan debt outstanding. The remaining 25% of borrowers went to graduate school; they account for the other half of the debt outstanding.
20% of U.S. adults report having paid off student loan debt. The 5-year annual average student loan debt growth rate is 15%. The average student loan debt growth rate outpaces rising tuition costs by 166.9%. In a single year, 31.5% of undergraduate students accepted federal loans.
If the debt forgiveness program is permitted to move forward, at a time when consumer spending already is high, it could lead to more inflation, Jones said. “We certainly don't have a consumer spending problem right now,” he said.
The average debt among recent graduates who took out student loans is nearly $30,000, according to an analysis by U.S. News, so the monthly payment on a 10-year standard repayment plan would be on the higher end of that range – around $300.
If your monthly payment does not cover the accrued interest, your loan balance will go up, even though you're making payments. Unpaid interest will also capitalize each year until your total balance is 10% higher than the original balance. This means you will pay interest on your interest.
Federal student loans and federal parent loans: These loans are funded by the federal government. Private student loans: These loans are nonfederal loans, made by a lender such as a bank, credit union, state agency, or a school.
Universities Are Investing in More Student Services
As schools invest more to attract students, costs for students go up. Between the 2009-2010 and 2020-2021 academic years, student services expenditures increased by 58% at private institutions and 43% at public institutions, per NCES.
The NDEA evolved into the Perkins Loan Program, which later facilitated the establishment of more comprehensive federal student loan programs under Title IV of the Higher Education Act of 1965, an Act signed into law by President Lyndon Johnson.
Through Federal Student Aid (a performance-based organization), the U.S. Department of Education awards more than $120 billion a year in grants, work-study funds, and low-interest loans to approximately 13 million students.
The federal government or a commercial entity owns your student loans. Private companies own all private loans. The U.S. Department of Education holds most federal loans. Both the Department of Education and private institutions partner with third parties called student loan servicers.
Pay Off High-Interest Loans First
With this approach, you pay off your loans from the highest interest rate to the lowest. You make the minimum payments on each balance except the highest-rate loan. You also make an extra monthly payment based on how much you can put toward the debt.