Guarantee agencies are responsible for approving student loans and insuring them against default. Guarantee agencies also oversee the student loan process and enforce federal and state rules regarding student loans. If a borrower defaults on an educational loan, the guarantee agency assumes responsibility for collecting the loan and repays the lender. This means that guaranteed educational loans are extremely low-risk loans for the lender, despite being unsecured. Each state has a different guarantee agency that administers the Federal Stafford and PLUS loans for students in that state. There are 41 guarantee agencies for educational loans in the United States. The state guarantee agency is the best source of information about FFELP loans in that state. Although the federal government sets the overall structure of the FFELP loan program (for example, loan limits and interest rates), each state may set additional restrictions on the loans, within federal guidelines. For the name, address, and telephone number of the state's guarantee agency, call the Federal Student Aid Information Center at 1-800-433-3243 (1-800-4-FED-AID).
This is an agency that guarantees the loan and repays a lender, should the borrower default on a student loan. In Texas, Texas Guaranteed Student Loan Corporation is our guarantee agency.