Direct loan programs overlap the alternative which is called the FFELP, or Federal Family Education Loan Program, which is a program designed to work through a network of private lenders. Since direct loan programs duplicate in many ways the FFEL programs, it is important to decide which program you want. Both programs offer both Stafford and PLUS loans.
The criteria for eligibility on both programs is the same and they follow identical need based guidelines, or have identical credit check requirements as those for non need based programs. Since both programs essentially provide the same loan funding this raises the natural question of how to choose between them.
To some degree the decision involves choosing which of two providers you will have to deal with. For example, although both will provide customer service personnel to answer any questions, in some cases you may find that private lenders will be more helpful and flexible while the government will be indifferent or more bureaucratic. This will not always be the case of course and sometimes you will find that just the opposite is true.
One of the best ways to get a feel for the service you are likely to receive from different lenders is to read some of the Internet forums dealing with the subject of student loans. Also with the tremendous growth of social networks in recent years it has become much easier to find a diverse set of opinions. Of course you do have to be careful as many of the views expressed are based more on personal taste than objective criteria, but reading the posts will quickly show you which side the poster favors. Read the rest of this entry »
