Student Loans: Avoiding Deceptive Offers

Direct Stafford Loans Online If you are considering accepting a private student loan, it is important to know who you do business …. For more information on federal student loans, write ….

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FTC Facts For Consumers, Student Loans: Avoiding Deceptive Offers
Student loans fall into two categories, federal loans and private loans. Federal loans, which are subject to oversight and regulation by the federal government, include:
Direct Loans, where the U.S. Department of Education is the lender; Federal Family Education Loans (FFEL), where private lenders make loans backed by the federal government; and Federal Perkins Loans.
Private loans, sometimes referenced as alternative loans, are offered by private lenders and do not include the benefits and protections available with federal loans. How to Spot Deceptive
Private Student Loan Practices. Some private lenders and their marketers use names, seals, logos, or other representations similar to those of government agencies to create the false or misleading impression that they are part of or affiliated with the federal government and its student loan programs.
ED does not send advertisements or mailers, or otherwise solicit consumers to borrow money. n Don’t let promotions or incentives like gift cards, credit cards, and sweepstakes prizes divert you from assessing whether the key terms of the loan are reasonable. Don’t give out personal information on the phone, through the mail, or over the Internet unless you know with whom you are dealing. Check out the track record of particular private student lenders with your state Attorney General (, your local consumer protection Special Considerations
for Consolidation of Federal Loans.
Avoid lenders and marketers who use high-pressure sales tactics. If all of your education loans have fixed interest rates, there may be no deadline to consolidate. If some or all of your loans have variable interest rates, when you consolidate into a fixed loan it may affect the interest rate of your loan. ome lenders impose restrictions on promised discounts. Some lenders lower the interest rate on your consolidated loan, but only if you opt for automated payments from your checking account.
Other lenders discount the interest rate on your consolidated loan, but only if your loan has at least a specified minimum loan balance. Still others agree to lower the interest rate on your consolidated loan, but only if you remain current on your payments for the life of the loan.
Some lenders sell consolidated loans to other companies. Be cautious about consolidating federal loans and private loans into one private loan. Consolidating a Perkins loan may not be in
your best interest. Frequent consolidation after borrowing may impact timelines you need to meet to qualify for these benefits.

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