Why is NSLP collecting a ½ percent default fee when other guarantors are collecting 1 percent and some are not collecting a fee at all?

Collecting the default fee assures the long-term viability of NSLP and the Federal Family Education Loan Program. The federal default fee is an integral part of the program. The fee, along with the guarantor’s accumulated reserves, is used to reimburse lenders when a borrower defaults and can’t repay a student loan.

This reimbursement “guarantee” is what encourages lenders to make low-interest loans to college students without a credit check or collateral. When deciding what fee to collect, guarantors must consider whether to use their reserve funds to pay the fee. Depleting these reserves may weaken their financial stability, adversely impact their ability to provide value-added products and services, and negatively affect the overall student loan program.

At NSLP, collecting a portion of the default fee ensures we will have sufficient resources to continue to provide our customers with high-quality products and services to effectively guarantee loans, provide premiere financial ... more.

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