FFELP student loans are a type of federal student loan. They were available to students before 2010 when the Direct Loan program replaced them. If you have FFELP student loans, you may be wondering what your options are for repayment. In this article, we will discuss the different repayment plans available to FFELP borrowers and how to apply for them.
What is an FFELP?
The Federal Family Education Loan Program (FFELP) was a federal student loan program that ran from 1965 through 2010. Under this program, private lenders provided loans to eligible students, and the federal government guaranteed the loans against default. Similar loans are now offered under the Federal Direct Student Loan Program, which are federal loans issued directly by the United States Department of Education.
In 2010, Congress ended the FFELP program and replaced it with the Direct Loan program. Under the Direct Loan program, all federal student loans are made by the U.S. Department of Education.
How does it work?
If you have an FFELP loan, you might be wondering what that means for you. Here’s a quick overview:
- Your FFELP loan is not automatically forgiven just because the program has ended. You are still responsible for repaying your loan in full, including any interest and fees accrued.
- If you have multiple FFELP loans, you might be able to consolidate them into a single Direct Consolidation Loan. This can make repayment more accessible by giving you a single monthly payment. Still, it will also extend the repayment period and increase the total amount of interest you pay over the life of the loan.
- Because they are private loans, loans granted under the FFEL Program are not eligible for the Public Service Loan Forgiveness program. There have been media reports of many FFEL borrowers unaware their loans were ineligible.
- If a private lender made your FFELP loan, that lender might transfer your loan to the Department of Education or another servicer. You should receive a notification if this happens. Your rights and responsibilities as a borrower will remain unchanged.
The federal government funds the loans.
They are then given to private lenders. The lenders will work with the student to determine how much money the student needs. The loan will be given to the student at a fixed interest rate. The lender and the student will determine the repayment terms of the loan. The government guarantees the loans but does not directly lend the money to students.
In Oct. 2021, the Department of Education announced a limited waiver that would allow payments on FFEL loans to count toward PSLF. To benefit from the limited waiver, borrowers with FFEL loans need to consolidate their loans into federal direct loans and submit a PSLF form before Oct. 31, 2022.
What are the different types of FFELP student loans available to student loan borrowers?
Stafford Loans are the most common type of FFELP loan, and they’re available to both undergraduate and graduate students. PLUS Loans are available to graduate and professional students and parents of dependent undergraduates. Finally, consolidation loans allow you to combine all your eligible federal student loans into one loan.
If you’re considering taking out an FFELP student loan, it’s essential to understand the different types of loans available and how they work. Talk to your financial aid advisor or lender about which kind of loan might be right for you. You can also learn more about FFELP student loans by visiting the Federal Student Aid website.
There are two main types of Stafford Loans: subsidized and unsubsidized. Subsidized Stafford Loans are need-based, which means that the federal government pays the interest while you’re in school and during your grace period. Unsubsidized Stafford Loans are not need-based, which means that you’re responsible for paying the goods from the time the loan is disbursed until it’s paid in full.
PLUS Loans are available to graduate and professional students and parents of dependent undergraduates. These loans have a higher interest rate than Stafford Loans and are not eligible for income-based repayment plans.
Consolidation loans allow you to combine all your eligible federal student loans into one loan with a single monthly payment. If you consolidate your loans, you may be able to extend your repayment period,
Students can use the money from their FFELP loans to pay for tuition, room and board, books, and other school-related expenses.
The interest rate on FFEL loans is variable, which can change over time. Borrowers can choose to make interest-only payments while in school or decide to make entire principal and interest payments.
Private lenders make FFELP loans, but the federal government guarantees them. If a borrower defaults on their loan, the government will pay the lender back. Because of this guarantee, FFELP loans typically have lower interest rates than private student loans.
If you’re thinking about taking out an FFELP loan, shop around and compare offers from different lenders. Of course, you’ll want to find the loan with the lowest interest rate and best terms that you can qualify for.
When to refinance your FFEL loans to lower your student loan payments and pay off student loan debt faster?
Consider refinancing your FFEL loan. When refinancing student loans, your repayment term and interest rate will depend on your credit history, current salary, and other factors.
If you have good credit and a steady income, refinancing your FFEL loans could lower monthly payments and help you pay off debt faster. Check out our student loan refinancing calculator to see how much you could save by refinancing your FFEL loans.
For FFELP Student Loan Forgiveness Programs, FFELP borrowers are eligible for the following student loan forgiveness programs: IDR Loan Forgiveness forgives your remaining balance after you pay 15% of your discretionary income for 25 years of monthly loan payments under a qualifying repayment plan — Income-Based Repayment Plan or Pay As You Earn Plan.
PSLF forgives your remaining balance after making 120 monthly payments under a qualifying repayment plan while working full-time for a qualifying employer — Public Service Loan Forgiveness.
Borrowers must repay their FFELP loans with interest.
The interest rate on these loans is variable, which can change over time. Borrowers can make payments while in school, but they’re not required to do so.
FFELP loans are made by private lenders, such as banks or credit unions. The federal government doesn’t lend money directly to students through the FFEL program.
If you have an FFELP loan, you might be able to consolidate it into a Direct Consolidation Loan. This would give you a single loan with one monthly payment. You might also be eligible for other repayment plans that aren’t available for FFELP loans. For example, you might be able to get a lower monthly payment if you consolidate your FFELP loans into a Direct Consolidation Loan and choose an income-driven repayment plan.
If you’re thinking about taking out an FFELP loan, shop around and compare offers from different lenders. Of course, you’ll want to find the loan with the lowest interest rate and best terms that you can qualify for.
In conclusion
If you are thinking about taking out an FFELP loan, research and compare all your options. You want to find the loan with the best interest rate and terms for you. Also, if you have an FFELP loan, know that opportunities are available to help make repayment more accessible, such as consolidation and income-driven repayment plans.
