6 Advantages to Federal Student Loans

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I totally agree with you about the hassle of a Sallie Mae loan and one step further....My loans were in deferment due to a full time student status, they have "re-wrote" my loan about 6 times now, I have treid to get something in writing on numerous occasions but no correspondence, no letter, no nothing. I tried to enter into forbearance and they were so ready to take my money, I had to pay the interest accured to date to enter into forebearance, then 2 weeks later they defaulted me and sold my loan back to Edfund.

Veronica of MO 1:57PM June 17, 2010

This is a never ending debt to this company. They will not let you see a record of your account. The loan is restarted at their will. Even if you want to continue your payments while in school, this company will stop your loan and restart a new loan. This means you never seem to touch the principle.
Will the government look into this and give a break to those who have paid for decades and are still owing a large amount. This has really been legalized theft.

jp of TX 12:41AM June 15, 2010

Yes Chas, it is fair. Lower class kids who manage to finish college deserve a leg up, because they were starting with the odds stacked against them.
Glad to see the Feds making it easy to come up with the cash for most college bound students, they are our future.

mstfd of OH 3:11PM June 14, 2010

do they still have the fine print that allows you to defer payment if you join or are in the military service?

candy of PA 12:49PM May 05, 2010

TJ and Chas evidently are either not currently students, or have not been for a long time.
Having consolidated under a federal direct loan, used federal direct loans to finance one year my law school education, and used a third-party lender for the other two years, I found the federal direct loan program to be an emphatic improvement, or at least no worse, in every respect: greater transparency, better website, better organized, identical customer service (except re: website), identical processing-time, and, above all, better terms. I'll repeat: better terms.
I can't begin to imagine what Chas means by "all the added benefits that a private sector lender can provide." Labyrinthine corporate bureaucracy, layering loan guarantors (which students choose) on top of shadowy loan service providers (which students do not choose)? Behind-the-curtain changes in loan service providers, like having your debt sold? No access to IBR? No political control over your terms? No bargaining leverage? To the contrary, the benefits seem to flow in the other direction: industry subsidy. If you're even slightly economically inclined, that term--industry subsidy--should make you shiver.
On top of which, it goes beyond insidious, cynical, and hypocritical for baby-boomers to saber-rattle for the privatization of education costs for the current generation of students and recent graduates. Thirty-odd years ago, boomers had the benefit of robustly funded public universities and the accompanying low tuition: University of California law degrees for ~$600 per year! Boomers then took their tax-subsidized college educations (paid for by their hard-working, tax-paying parents when marginal tax rates were based in fiscal reality) to corporate board rooms and government offices and closed the doors behind them. Worse yet, after receiving their tax-subsidized educations, they schemed to extract further subsidy from the generation behind them: Cut taxes for boomers, raise tuition, saddle young people with debt, extract tax-funded subsidy to make profits and pay salaries at shadowy third-party lenders, and collect interest. The corporate welfare theory of publicly funding education reeked of corrupt, Russian-style bureaucracy--not just the stench of Soviet-era tax pilfering bureaucrats, but of modern tax pilfering, market distorting, subsidy extracting oligarchs
Student loan debt reduction is a serious public policy issue for all Americans. Our economy does not function without educated workers. Workers cannot educate themselves for free. In general, students can't afford to pay their own ways anymore, given the rise in costs. Our taxes can thus either go directly to public institutions to drive the cost of tuition down, promote studies in need-areas (math, engineering, languages, etc.), and leave graduates free to create wealth by working and spending. Or, our taxes can go to support a system that lines some pockets while leaving students in black holes of debt.

indebted public attorney of CA 12:40PM April 26, 2010

Unlike what the author said about private lenders, there is never a penalty when you pay off a student loan, federal or private.
Like everything else that government runs, the Federal Direct Loan Program, costs more, is unefficent, and ineffective. Students wait for funding, the process is slow, and the student doesn't get all the added benefits that a private sector lender can provide. BUT what would you expect the government to do.
Shame on congress for not reading the health care bill and all the hidden attributes.
Once again government is running another private sector industry, similar to the automotive, financial, and health care. Can you say communism?

TJ of FL 8:52AM April 26, 2010

However, the government takeover of the 45 year successful FFELP program run with banks and state guarantors has been taken over (like General Motors) by Obama's government putting 35,000 people out of work at the banks. Colleges are not looking forward to managing the Federal Direct Program (FDL)that has been running simultaneously for many years and used by only a few schools. Will the government be able to convert schools in time this fall and live up to their hype. The takeover may cause students to go without funds and schools to close.
On top of all the government problems the schools will face to convert to government run FDL, that schools do not want, the students who take the loans will be forced to pay ror low income student grants. This really means that middle income students will get debt and low income students will go to school for free paid for by students that have to take FDL loans. This is not fair.

Chas of FL 4:31PM April 21, 2010

What better way to encourage less financially well equipped kids to go to college than the federal loans! I was the beneficiary of one a very long time ago, a National Defense Education Act loan. It had all the features of this new one and, in time, I was able to pay it off painlessly. Loans from private institutions are no comparison at all and, because of the interest load that builds over, say, 8 to 10 years, can do more damage than good to young people early in their work careers.
We say, in this country, that education is important. The federal loans are one way of putting our money where our mouths are.

Ron W. Smith of UT 3:48PM April 21, 2010