Student Loan Guarantee Agencies: FAQ
What is a guarantee agency?
A guarantee agency protects student loans against default. The lender collects a default fee (commonly 1 percent) from each loan it disburses and pays it to the designated guarantee agency to insure the loan. (Some guarantors may waive or reduce the fee, depending on their reserve fund.) If a borrower defaults, the guarantee agency reimburses the lender for the balance remaining on the loan.
What is the New York State Higher Services Corporation (HESC)?
HESC is a guarantee agency for federal student loans and New York State student aid.
Do I need to be a New York State Resident to go through HESC?
No. If you are attending a school in New York State and meet the eligibility criteria for a Federal Stafford Loan or Federal PLUS Loan, you may go through HESC by borrowing from a HESC-registered lender.
Which lenders are registered with HESC?
HESC works with most major Federal Stafford Loan and Federal PLUS Loan lenders. You can go to the "Paying For College" area at hesc.ny.gov for a directory of all HESC-registered lenders (there are more than 100).
Am I required to go through HESC for my Stafford or PLUS loan?
No. You may elect to borrow your federal loan from a lender registered with another guarantee agency.
You have the right to borrow through any guarantor you choose.
If you wish to borrow from a lender registered with HESC, you should complete the NYU certified loan application (called the Master Promissory Note, or simply the MPN) online on the HESC web site at hesc.ny.gov.
If you choose to borrow through another guarantee agency, please contact the Office of Financial Aid, identify the guarantor that you prefer, and we will provide you with further instructions.