Student Loan Primer - Student Loan Blog by studentlsc.com

The Federal Family Education Loan Program

The FFELP represents the largest federal source of financial aid for college. The FFELP is a public-private partnership created by Congress in 1965 to deliver and administer guaranteed education loans for students and their parents. The program has provided more than $567 billion in low-cost loans to tens of millions of students and parents.The FFELP provides the following types of loans for postsecondary education and training:

Stafford loans: Stafford loans represent the largest component of the FFELP, supplying nearly $46.8 billion in aid for college each year. Subsidized Stafford loans are available to students who demonstrate financial need. The federal government pays the interest on these loans while the student is in school, during a six-month grace period after the student leaves school, and during authorized periods of loan deferment. Unsubsidized Stafford loans are available to students regardless of their financial need; however, the student is responsible for all interest that accrues on the loan.

PLUS loans: Parents can borrow up to the total cost of their children’s undergraduate education, less financial aid from other sources. Beginning July 1, 2006, graduate and professional students also may take out PLUS loans. The FFELP annually supplies nearly $8.3 billion in PLUS loans to parents.

Federal Consolidation loans: Borrowers can consolidate their federal education loans into one loan with a single monthly payment and, depending on their outstanding loan balance, extend their repayment period. During fiscal 2006, borrowers combined more than $72.8 billion in existing education debt through Federal Consolidation loans.