Federal Family Education Loan Program (FFELP) loans are federally backed loans that were originally funded by private companies. The FFEL Program ended in 2010 to pave the way for Federal Direct Loans, but many borrowers still have them. If you took out federal student loans prior to 2010, you may have a FFELP loan.
These older loans may have a high interest rate and don’t qualify for certain federal student loan benefits and forgiveness programs. As a result, you may want to consider consolidating or refinancing FFELP loans.
Read on to learn how you can find out if you have a FFELP loan and, if you do, what your options are in terms of repayment, forgiveness, consolidation, and refinancing.
Does the Federal Family Education Program Still Exist?
Congress discontinued FFELP loans in 2010 and no new loans have been issued under the program since July 1, 2010. At that time, FFELP was replaced by the Federal Direct Loan Program.
Even though no new FFELP loans are being issued, they are far from paid off. As of June 2023, there was a total of $191 billion in FFELP loans remaining with 8.5 million borrowers. Borrowers of these loans are still responsible for making these payments, lenders are required to service them, and the federal government still insures them.
đź’ˇ Quick Tip: Ready to refinance your student loan? You could save thousands.
What Are FFELP Student Loans?
FFEL Program loans are student loans that were issued by commercial lenders but guaranteed by the federal government. That means if a borrower defaulted, the government would pay the lender an interest subsidy to make up for the loss.
The FFEL Program included:
• 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)
The federal government purchased some lenders’ FFELP portfolios during the Great Recession (2007-2009). As a result, some FFEL Program debt is owned by the government. However, the majority of FFELP loans are privately held.
All federal student loans issued now are from the Direct Loan Program, which includes the same types of loans listed above. However, there are big differences in how the program is administered. The federal government itself now draws on its own capital to directly lend to students, while several federal contractors take care of servicing the loans.
Borrowers with FFELP loans might have had different terms and benefits compared with Direct Loans.
Recommended: Private Student Loans vs Federal Student Loans
How Do I Know if I Have FFELP Loans?
If you have federal student loans from prior to July 2010, you probably have FFELP loans.
To find out if you have a FFEL Program loan, simply log in to your studentaid.gov
account. Under the “Loan Breakdown” section, select “View Loans” to see the list of loans you’ve received. If a loan has “FFEL” at the front of its listing, it’s a FFEL Program loan.
Understanding Your FFEL Loan
If you have a FFELP loan, the biggest difference from a Direct Loan is the source of the money — you received it from a private lender instead of the federal government. Within the FFELP, you can have one of these types of loans (which are no longer offered):
• Subsidized Stafford Loan This is a loan for undergraduate students where interest is covered by the federal government while the student is in school at least half-time, and during grace or deferment periods.
• Unsubsidized Stafford Loan This is a loan for undergraduate, graduate, and professional degree students where interest is charged during the entire life of the loan.
• Federal PLUS Loan This is a loan for either parents of dependent undergraduate students or for graduate or professional students. Interest is charged for the entire loan period.
• Federal Consolidation Loan This is a loan designed for borrowers to combine multiple federal student loans into a single loan with a single payment.
If you’re not sure what type of loan you have, one place to look is the National Student Loan Data System . This database houses everything you need to know about your federal student loans, including your interest rate, balances, and payment plans.
Are FFEL Loans Eligible for Forgiveness?
FFELP loans are eligible for Income-Driven Repayment (IDR) forgiveness. With this plan, your monthly payment is based on your income and family size and after making payments for 20 or 25 years, the remaining loan balance is forgiven. The only exception is FFELP loans for parents, which do not qualify for this repayment plan.
However, FFELP loans are not eligible for:
• Public Service Loan Forgiveness (PSLF)
• Pay As You Earn (PAYE)
• Saving on a Valuable Education (SAVE) — formerly the REPAYE Plan
• Income-Contingent Repayment (ICR)
To access these programs, you’ll have to consolidate FFELP loans into a federal Direct Consolidation Loan.
Can I Still Consolidate or Refinance My FFEL Loans?
Yes, you can still consolidate or refinance your FFEL loans.
Most types of FFELP loans can be consolidated into a Direct Consolidation Loan. If you choose to consolidate, you may become eligible for additional income-driven repayment plans that offer loan forgiveness after 20 or 25 years of repayment. You can repay a Direct Consolidation Loan using the PAYE, SAVE, or ICR repayment plans.
Consolidating your FFEL loans also opens up access to PSLF, which forgives your remaining loan balance after 120 payments while working in a public service job.
In addition, consolidating multiple federal student loans simplifies and streamlines repayment, since you’ll only have one monthly payment to make.
However, student loan consolidation involves some risks. These include losing previously earned PSLF and repayment plan forgiveness credit. (However, the federal government has waived this penalty for those who consolidate before the end of 2023.)
It’s also important to understand that consolidation most likely won’t save you any money. Your new interest rate will be the weighted average of your federal loans’ interest rates, rounded up to the next one-eighth of the percentage point. While consolidation may extend your repayment term (and lower your payment), an extended repayment term means paying more in interest in the long run.
You also have the option of refinancing your FFELP loans. This involves getting a new student loan with a private lender and using it to pay off your FFELP student loans (you can also fold in any other private or federal student loans you may have).
If you have excellent credit, student loan refinancing may allow you to qualify for a lower interest rate. This is especially true of older federal loans, which were made at higher interest rates. Just keep in mind that refinancing federal student loans with a private lender will cause the loans to lose federal protections, such as forbearance and forgiveness programs.
đź’ˇ Quick Tip: When refinancing a student loan, you may shorten or extend the loan term. Shortening your loan term may result in higher monthly payments but significantly less total interest paid. A longer loan term typically results in lower monthly payments but more total interest paid.
The Takeaway
The Federal Family Education Loan Program, or FFELP, was a loan program in which the U.S. Department of Education worked with private lenders to provide student loans that were backed by the federal government. The program ended on July 1, 2010, but if you have federal student loans from prior to that date, you may have a FFELP loan.
To become eligible for federal programs like PSLF and the new SAVE repayment plan, you’ll need to consolidate your FFEL loan into a Direct Consolidation Loan. If you’re looking to save money on your FFEL loan, you may want to explore refinancing the loan.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SOSL1123022
