Choosing the Right Guarantor

In addition to choosing the lender for your student loan, you also have the right to choose the guarantor of that loan.

The guarantor is an organization that administers the Federal Family Education Loan Program (FFELP) on behalf of the U.S. Department of Education. Simply put, it means that a guarantor "guarantees" payment to the loan holder by agreeing to buy the loan if the borrower defaults. The MDHE student loan program is Missouri's designated guaranty agency.

Why choose the MDHE as your guarantor?

• For Federal Stafford and PLUS loans guaranteed by the MDHE on or after July 1, 2008, the MDHE will pay the 1% Federal Default Fee (FDF) on behalf of the borrower when attending a Missouri school. That equates to a savings of $55 on a $5,500 loan.

• Choosing the MDHE, a state agency, is a decision to keep Missouri dollars right here in the Show Me State, helping to ensure that the state remains economically healthy. Unlike other guarantors, any earnings the MDHE receives from administering the federal student loan programs are reinvested into the state of Missouri and its citizens, not other states or corporate shareholders.

• When choosing MDHE as the guarantor of loans held by MOHELA, Missouri's designated secondary market and student loan servicer, repayment benefits such as interest rate discounts and periodic loan forgiveness programs may apply.