What are FFELP loans? – Councilor Forbes


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The US government has provided student loans through the Federal Family Education Loan Program (FFELP). While the program ended in 2010, there are still many borrowers with FFELP loans.

At the end of 2020 – the most recent data available – 11 million people had FFELP loans outstanding, with balances totaling over $ 245 billion.

If you are one of the millions of FFELP borrowers still paying off these loans, here is what you can do to manage your debt.

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What are FFELP loans?

The FFELP was introduced as part of the Higher Education Act of 1965. Through the FFELP, private lenders issued federal loans guaranteed and subsidized by the federal government.

There are two main types of FFELP loans: commercial loans and those owned by the Ministry of Education.

FFELP loans have been provided to undergraduates, graduate students and parents in the following forms:

  • Stafford: Stafford loans were intended for undergraduate and graduate students enrolled at least part-time. Students with financial need could benefit from subsidized loans.
  • Unsubsidized Stafford: Unsubsidized Stafford Loans did not offer an interest subsidy for undergraduate and graduate borrowers.
  • MORE: PLUS loans were intended for borrowing parents who took out loans for their children’s undergraduate education. In 2006, the FFELP PLUS loan option was expanded to include graduate students.
  • Consolidation: FFELP Consolidation Loans have allowed borrowers to combine multiple Federal Student Loans into one.

The loan program ended in 2010 when the Health Care and Education Reconciliation Act was passed. The last loans were issued before July 1, 2010. The FFELP has been replaced by the federal direct loan program.

How do I know if I have a FFELP student loan?

If you applied for federal financial assistance before 2010, your loans are likely FFELP loans. Many of those who borrowed before 2010 still have loans outstanding because they deferred payments or took advantage of extended repayment plans.

To know for sure what loans you have, you can use the National Student Loan Data System to find your loan information. Once you’ve signed in with your Federal Student Assistance ID, you can view all of the federal student loans in your name.

If you do not have your Federal Student Aid ID, you can also contact your student loans manager to inquire about your loans.

What should I do if I have FFELP loans?

Although FFELP loans are no longer issued and the program ended in 2010, you may still have an outstanding FFELP debt. The loans don’t just disappear because the program ended; you still have to repay your loans according to the terms of your promissory note.

The FFELP and the CARES law

In March 2020, the Coronavirus Aid, Relief and Economic Security Act (CARES) was passed. As part of its relief measures, the CARES Act suspended payments on federal student loans and reduced interest rates on all loans to 0%. The provisions of the CARES law on student loans are to last until September 30, 2021.

For FFELP borrowers, things are a bit confusing. Borrowers benefiting from FFELP loans held by the Ministry of Education are eligible for suspension of payments and waiver of interest. However, borrowers with FFELP loans held by businesses are not. This means that if you have FFELP business owned loans, you are still required to make payments and your loans continue to earn interest.

In March 2021, the government expanded the CARES law to include FFELP borrowers already in default. If you have FFELP loans but are not in default, you cannot take advantage of the suspension of payment or the interest waiver.

Some FFELP loan services offer support or alternative payment plans to borrowers affected by the pandemic. If you can’t pay your payments, contact your loan officer to discuss your options.

4 FFELP loan relief options

While most FFELP borrowers are not eligible for the CARES Act, there may be other ways to get your student loan debt relief. If you can’t afford your payments, consider the following options:

1. Sign up for an alternative payment plan

If your payments are over your means, you may be eligible for one of the following payment plans:

  • Diploma: With a progressive repayment plan, you have a 10-year term. Your payments are initially low, but increase every two years.
  • Expanded: The extended repayment plan changes the repayment term to 25 years. Your payments can be fixed or progressive. If your extended plan is progressive, your payments will increase every two years.
  • Reimbursement based on income: Under an income-based repayment plan, your monthly payments are based on your income. As your income changes, your payments will also change.

2. Consolidate your loans

Another option is to consolidate your loans with a direct consolidation loan. These are federal loans that are part of the direct loan program and that are eligible for relief measures under the CARES Act.

By consolidating your FFELP loans, you will transfer them to the direct loan program. Once the consolidation is complete, you can take advantage of the current suspension of payment and interest relief.

Once the CARES Act is over and payments resumed, you will be able to use other direct loan benefits, such as the ability to sign up for an income-based repayment plan.

You can apply for a direct consolidation loan online.

3. Tolerance or postponement

If you have FFELP loans and you are not eligible for the CARES Act, you may be granted a deferment or forbearance period during which you defer your payments. FFELP forbearance works differently from federal forbearance for direct loans and may vary depending on your service agent.

For example, Navient offers one-month coronavirus abstention periods to FFELP borrowers who request them. During this time, your loan is made current and your payments are delayed by at least a month.

4. Refinance your FFELP loans

If you want to pay off your FFELP loans as quickly as possible, another option is student loan refinancing. If you have good credit, you could refinance your loans to get a lower interest rate. You can also extend the term of your loan to reduce your monthly payments.

However, refinancing federal loans, including FFELP loans, has some drawbacks. Once you refinance your debt, your loans will no longer be considered federal loans and you will no longer be eligible for federal forbearance or deferment.

If you do decide to refinance your loans, compare the rates and policies of several student loan refinance lenders to get the best deal.

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