So in 1965, Congress opted to move the program to the private banking sector, where the
federal government guaranteed the loans but any federal payments on the defaults would be several years down the line.
Until recently, many borrowers had to go through
a government guaranteed loan program, such as the Federal Housing Administration (FHA Loans) or the Department of Veterans Affairs (VA Loans), to get a mortgage with less than a 10 % down payment.
It really depends if this is
a government guaranteed loan or not.
Until recently, many borrowers had to go through
a government guaranteed loan program, such as the Federal Housing Administration (FHA) or the Department of Veterans Affairs, to get a mortgage with less than a 10 % down payment.
In the beginning, federal involvement in student loans utilized private lending institutions as middlemen with the federal
government guaranteeing any loans that went into default.
«My plea is for us to understand the value of mortgage insurance as a credit enhancement as [a way] for getting in front of the government in terms of first - loss position so that we can have a reasonable risk on
a government guarantee loan but not an unreasonable guarantee for the government.»
SLM Corp. (also known as Sallie Mae) operates two distinct businesses related to the student loan industry: 1) Consumer Lending: originates, acquires, finances and services private student loans, and 2)
Government Guaranteed Loans: manages a portfolio of private loans guaranteed by the government through the Federal Family Education Loan Program (FFELP).
His comment at the time was, «Why are we paying people to lend the government money and then
the government guarantees the loan and the government takes back the loan?»
Instead
these government guaranteed loans are governed by the Higher Education Act.