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FFEL program loans were (and still are) held by the Education Department, but most were held by a commercial lender or guaranty agency. This created problems for borrowers who still had these loans after the program ended
FFEL Program Student Loans: What They Are, How They Work
What Are FFEL Program Student Loans?
Federal Family Education Loan (FFEL) program students loans, which were loans facilitated through private lenders but guaranteed by the federal government, are no longer available for new borrowers. However, many people who took out these loans more than a decade ago still have them. Unfortunately, some student loan relief options, including most income-driven repayment (IDR) plans and public service loan forgiveness (PSLF) plans, exclude FFEL program loans.
So, many students consolidate eligible FFEL loans into a direct consolidation loan that lets them maintain federal benefits and protections while unlocking access to enhanced repayment and forgiveness options. If you have FFEL loans or just want to learn more about them, read on to learn the history of these loans and options for current borrowers.
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Key Takeaways
- The Federal Family Education Loan (FFEL) program loans were discontinued in 2010, yet they still play a significant role in the student loan landscape today.
- The program involved private lenders with government guarantees, which made FFEL loans distinct from direct loans.
- The transition from the FFEL program to direct loans marked a significant shift in federal student loan policy.
- Borrowers with outstanding FFEL program loans have specific options today, including consolidation with a direct consolidation loan.
How FFEL Student Loans Worked
The U.S. Department of Education worked with private lenders to provide student loans guaranteed by the federal government through the FFEL program. Loans that fell within this program included:1
- Subsidized federal Stafford loans
- Unsubsidized federal Stafford loans
- Federal PLUS loans (also known as FFEL PLUS loans)
- Federal consolidation loans (also known as FFEL consolidation loans)
Some FFEL program loans were (and still are) held by the Education Department, but most were held by a commercial lender or guaranty agency. This created problems for borrowers who still had these loans after the program ended. Loans held by private lenders or guaranty agencies became ineligible for most federal student loan relief programs and forgiveness plans
History of FFEL Student Loans
The United States federal government began offering student loans in 1965 through a program that’s known today as the Federal Family Education Loan (FFEL) program.2
This wasn't the government's first foray into the student loan landscape. The first federal student loans were offered under the National Defense Education Act of 1958.3 The FFEL program was built on those first federal loans but had the backing of the U.S. government, meaning it agreed to take financial responsibility for student loan amounts not paid back.
The FFEL Program ended July 1, 2010.1 After that, FFEL loans were no longer available to new borrowers. However, borrowers who previously took out loans through the program still had them when it ended, and some still do.
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Options for FFEL Program Loan Borrowers Today
All new federal student loans available today are offered through the William D. Ford Federal Direct Loan Program.4 However, borrowers who still have FFEL program loans have options when it comes to qualifying for a lower monthly payment, getting out of debt faster, or both.
- Repay with income-driven repayment: The Department of Education reports that most FFEL loans are only eligible for one income-driven repayment (IDR) plan. However, borrowers may be able to access more income-driven plans if they consolidate their loans into a new direct consolidation loan first.1
- Access loan forgiveness: Consolidating with a direct consolidation loan also makes it possible for loans to qualify for public service loan forgiveness (PSLF), which forgives remaining balances when borrowers work in an eligible public service position and make payments on an eligible income-driven plan for 10 years.15
If you consolidate a FFEL PLUS loan made to parents, it will only be eligible for income-driven repayment on the income-contingent repayment plan (ICR).1
How Do I Know if I Have FFEL Program Loans?
Log into your studentaid.gov account to see the kinds of loans you have under the "Loan Breakdown" and "View Loans" tabs. If a loan has "FFEL" listed before the loan amount or other information, the loan is part of this program.
Are FFEL Program Loans Federal or Private?
Some FFEL Program loans are held by the U.S. Department of Education, whereas others are held by private lenders or guaranty agencies.
What Are My Repayment Options for a FFEL Debt?
You can repay your student loans under the current plan they're on, and you can repay most FFEL loans on at least one income-driven repayment (IDR) plan. You can also consolidate these loans with a federal direct consolidation loan in order to access more IDR options and Public Service Loan Forgiveness (PSLF).
Should I Consolidate My FFEL Program Loan?
While consolidating your loan can give you more student loan repayment options overall, it could also lead to paying more in interest over time if you change your loan repayment term. If you consolidate loans that aren’t direct loans, you can also lose out on certain borrower benefits you had before. These can include interest rate discounts, loan cancellation benefits, or principal rebates.
Is an FFEL Program Loan Eligible for Forgiveness?
Borrowers can qualify for loan forgiveness with FFEL loans through IDR plans. However, borrowers must consolidate with a direct consolidation loan to access all IDR plans currently available or to qualify for PSLF.
The Bottom Line
While FFEL Program loans are no longer available to new borrowers, their legacy still continues on—for better or for worse. Fortunately, borrowers who have these loans don't have to stick with them if they don't want to. FFEL loans can be consolidated into a direct consolidation loan, which opens the door to a broader range of repayment and loan forgiveness options.
