Student Loans: The Primary Parties Involved

Student loans can help you pay for tuition, books, housing and any additional education-related needs you may have. Before applying for a student loan, it's important to fully understand the student loan process including the parties involved and each party’s responsibilities.

The Lender

The lender is the bank or lending institution that finances your student loan. The loan money you receive comes directly from the lender. A student loan lender may either by the federal government, if you apply for a federal student loan, or a private lender. Lenders make a profit from lending to you by adding interest and fees to your student loan and collecting the full amount from you over time.

The Financial Aid Office

The financial aid office is a key player in the student loan process. If you apply for a federal student loan, the funds are sent directly to your college’s financial aid office rather than to you. If you opt for a private student loan, the financial aid office is responsible for verifying your enrollment status to the lender.

The Cosigner

If you don’t have the income or credit history to qualify for a private student loan, you may need a cosigner. The cosigner pledges to take full responsibility for repaying the student loan in the event that you fail to keep up with payments.


You are the most important party involved in the student loan process. You are responsible for acquiring the necessary documentation to apply for the student loan, choosing your lender and repaying the total amount you borrow.

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