Loan Origination

The school’s primary responsibility in the loan origination and/or application process is to certify that the student is eligible for the loan amounts requested. The school, not the lender, determines the student’s or parent’s eligibility for a Federal Stafford or PLUS Loan.

Lender Responsibilities

To participate in FFELP, a lender must meet the guarantor’s eligibility requirements and complete a lender agreement with the guarantor (ISAC) to participate in the program.  A lender also may complete other agreements (holder agreement or Blanket Certificate of Loan Guaranty) to take advantage of various products and services offered by the guarantor.

To maintain eligibility to participate in FFELP, a lender must administer its loan portfolio in compliance with:

• the Higher Education Act of 1965 as amended;
• federal regulations administered by the U.S. Department of Education (ED);
• federal directives, including ED’s guidance such as Dear Colleague Letters/Dear Partner Letters;
• guarantor policies; and
• other requirements and procedures provided by the guarantors with which the lender participates.

To facilitate full access to postsecondary education for all eligible students, federal regulations authorize a Lender of Last Resort.  The principal guarantor for each state is responsible for developing rules and procedures for this program.   A lender must complete a Lender of Last Resort agreement with the guarantor in order to participate in this program.

The Common Manual provides more information regarding the lender’s responsibilities.