The gov backs the loan, protecting the lender, but when the gov is the lender, who protects us?................
My understanding is that the ffel program lends all federal dollars for this program and students/parents apply through one of two channels - their option: the banks or through the .gov;
The banks and the govt. have rate agreements, payback agreements etc....not like a car loan where the bank uses its capital.
I don’t see that the gov. role any different as far as the amount of money it is putting up - it pays the entire program - not “backing” it - govt even pays the interest on the loan while the students with need are still in school (subsidized stafford)