How is People Capital affected by changes to the Federal Student Loan Program?
Until recently, the majority of Federal loans were made by private entities (e.g. Sallie Mae, Citibank, Nelnet and thousands of Banks) but were “guaranteed” by Federal guarantors and the Federal government. The Federal Student Loan Program also offers Federal student loans that are originated and “guaranteed” by the government (often referred to as The Federal Direct Student Loan Program). There is currently pending Legislation which may eliminate the Federal Student Loan program which banks participate in. This would mandate that 100% of Federal student loans go through the Direct Lending Program. These recent changes do not affect the amount of funding available, rather the process under which the loans are made. Under either structure these “federal loans” remain separate from the “private student loans” originated by the People Capital platform and People Capital encourages borrowers to maximize Federal funding before considering a Private loan.
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