FFEL Program Student Loans: What They Are, How They Work

What Are FFEL Program Student Loans?

Borrowers nary longer person entree to caller student loans done nan Federal Family Education Loan (FFEL) program. However, galore group who took retired these loans much than a decade agone still person them. Unfortunately, immoderate student indebtedness alleviation options, including astir income-driven repayment (IDR) plans and nationalist work indebtedness forgiveness (PSLF) plans, exclude FFEL programme loans. 

So, galore students consolidate eligible FFEL loans into a nonstop consolidation indebtedness that lets them support national benefits and protections while unlocking entree to enhanced repayment and forgiveness options. If you person FFEL loans aliases conscionable want to study much astir them, publication connected to study nan history of these loans and options for existent borrowers.

History of FFEL Student Loans

The United States national authorities began offering student loans successful 1965 done a programme that’s known coming arsenic nan Federal Family Education Loan (FFEL) program. Loans offered done nan programme were facilitated done private lenders but guaranteed by nan national government.

This wasn't nan government's first foray into nan student indebtedness landscape. The first national student loans were offered nether nan National Defense Education Act of 1958. The FFEL programme was built connected those first national loans but had nan backing of nan U.S. government, meaning it agreed to return financial work for student indebtedness amounts not paid back.

How FFEL Student Loans Worked

The U.S. Department of Education worked pinch backstage lenders to supply student loans guaranteed by nan national authorities done nan FFEL program. Loans that fell wrong this programme included:

• Subsidized national Stafford loans
• Unsubsidized national Stafford loans
• Federal PLUS loans (also known arsenic FFEL PLUS loans)
• Federal consolidation loans (also known arsenic FFEL consolidation loans)

Some FFEL programme loans were (and still are) held by nan Education Department, but astir were held by a commercialized lender aliases guaranty agency. This created problems for borrowers who still had these loans aft nan programme ended. Loans held by backstage lenders aliases guaranty agencies became ineligible for astir national student indebtedness alleviation programs and forgiveness plans.

Options for FFEL Program Loan Borrowers Today

All caller national student loans disposable coming are offered done nan William D. Ford Federal Direct Loan Program. However, borrowers who still person FFEL programme loans person options erstwhile it comes to qualifying for a little monthly payment, getting retired of indebtedness faster, aliases both.

• Repay pinch income-driven repayment: The Department of Education reports that astir FFEL loans are only eligible for 1 income-driven repayment (IDR) plan. However, borrowers whitethorn beryllium capable to entree much income-driven plans if they consolidate their loans into a caller nonstop consolidation indebtedness first.
• Access indebtedness forgiveness: Consolidating pinch a nonstop consolidation indebtedness besides makes it imaginable for loans to suffice for nationalist work indebtedness forgiveness (PSLF), which forgives remaining balances erstwhile borrowers activity successful an eligible nationalist work position and make payments connected an eligible income-driven scheme for 10 years.

The Bottom Line

While FFEL Program loans are nary longer disposable to caller borrowers, their bequest still continues on—for amended aliases for worse. Fortunately, borrowers who person these loans don't person to instrumentality pinch them if they don't want to. FFEL loans tin beryllium consolidated into a nonstop consolidation loan, which opens nan doorway to a broader scope of repayment and indebtedness forgiveness options.