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What Are FFELP Student Loans?
Student debt relief measures are available to many FFELP borrowers, but not all.
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Cecilia Clark Assistant Assigning Editor | Education financing products, Veteran's benefits, Student and graduate finances
Cecilia Clark is an editor on the loans team. She specializes in student loans and manages product reviews and roundups. Previously, she worked as a freelance writer and developed communications strategies for cybersecurity firms. Cecilia has also worked in post-secondary education, elevator operations management and sales and military nuclear command control, maintenance management and public affairs.
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Karen Gaudette Brewer leads the Core Personal Finance team at NerdWallet. Previously, she guided students and their families through the ins and outs of paying for college and managing student debt on the Higher Education team. Helping people navigate complex money decisions and feel more confident brings her great joy: as the daughter of an immigrant, from an early age she was the translator of financial documents and the person who called the credit card company to fix fraud.
She joined NerdWallet with 20 years of experience working in newsrooms and leading editorial teams, most recently as executive editor of HealthCentral. She launched her journalism career with The Associated Press and later worked for The (Riverside) Press-Enterprise, The Seattle Times, PCC Community Markets and Allrecipes.com.
She is a graduate of the 2022 Poynter Institute Leadership Academy for Women in Media. Her writing has been honored by the Society for Features Journalism and the Society of Professional Journalists. In addition, she’s the author of two books about the Pacific Northwest.
Anna Helhoski is a senior writer covering economic news and trends in consumer finance at NerdWallet. She is also an authority on student loans. She joined NerdWallet in 2014. Her work has appeared in The Associated Press, The New York Times, The Washington Post and USA Today. She previously covered local news in the New York metro area for the Daily Voice and New York state politics for The Legislative Gazette. She holds a bachelor's degree in journalism from Purchase College, State University of New York.
Eliza Haverstock Lead Writer | Student loan repayment, paying for college
Eliza Haverstock is NerdWallet's higher education writer, where she covers all aspects of college affordability and student loans. Previously, she reported on billionaires and investing for Forbes in New York, and she also covered private markets for PitchBook in Seattle. Eliza got started at her college newspaper at the University of Virginia and interned for Bloomberg, where she spent a summer writing a feature story about plastic straws. She is based in Washington, D.C.
NerdWallet ratingNerdWallet's ratings are determined by our editorial team. The scoring formula for student loan products takes into account more than 50 data points across multiple categories, including repayment options, customer service, lender transparency, loan eligibility and underwriting criteria.
Fixed APR
3.69-17.99%
College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC.. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply. As certified by your school and less any other financial aid you might receive. Minimum $1,000. Rates shown include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. If a payment is returned, you will lose this benefit. Variable rates may increase after consummation. This informational repayment example uses typical loan terms for a freshman borrower who selects the Flat Repayment Option with an 8-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7.78% fixed Annual Percentage Rate (“APR”): 54 monthly payments of $25 while in school, followed by 96 monthly payments of $176.21 while in the repayment period, for a total amount of payments of $18,266.38. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. Information advertised valid as of 9/3/2024. Variable interest rates may increase after consummation. Approved interest rate will depend on the creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.
Variable APR
5.59-17.99%
College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC.. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply. As certified by your school and less any other financial aid you might receive. Minimum $1,000. Rates shown include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. If a payment is returned, you will lose this benefit. Variable rates may increase after consummation. This informational repayment example uses typical loan terms for a freshman borrower who selects the Flat Repayment Option with an 8-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7.78% fixed Annual Percentage Rate (“APR”): 54 monthly payments of $25 while in school, followed by 96 monthly payments of $176.21 while in the repayment period, for a total amount of payments of $18,266.38. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. Information advertised valid as of 9/3/2024. Variable interest rates may increase after consummation. Approved interest rate will depend on the creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.
NerdWallet ratingNerdWallet's ratings are determined by our editorial team. The scoring formula for student loan products takes into account more than 50 data points across multiple categories, including repayment options, customer service, lender transparency, loan eligibility and underwriting criteria.
Fixed APR
3.59-15.49%
Lowest rates shown include the auto debit. Advertised APRs for undergraduate students assume a $10,000 loan to a student who attends school for 4 years and has no prior Sallie Mae-serviced loans. Interest rates for variable rate loans may increase or decrease over the life of the loan based on changes to the 30-day Average Secured Overnight Financing Rate (SOFR) rounded up to the nearest one-eighth of one percent. Advertised variable rates are the starting range of rates and may vary outside of that range over the life of the loan. Interest is charged starting when funds are sent to the school. With the Fixed and Deferred Repayment Options, the interest rate is higher than with the Interest Repayment Option and Unpaid Interest is added to the loan’s Current Principal at the end of the grace/separation period. To receive a 0.25 percentage point interest rate discount, the borrower or cosigner must enroll in auto debit through Sallie Mae. The discount applies only during active repayment for as long as the Current Amount Due or Designated Amount is successfully withdrawn from the authorized bank account each month. It may be suspended during forbearance or deferment. Advertised APRs are valid as of 9/24/2024. Loan amounts: For applications submitted directly to Sallie Mae, loan amount cannot exceed the cost of attendance less financial aid received, as certified by the school. Applications submitted to Sallie Mae through a partner website will be subject to a lower maximum loan request amount. Miscellaneous personal expenses (such as a laptop) may be included in the cost of attendance for students enrolled at least half-time. Examples of typical costs for a $10,000 Smart Option Student Loan with the most common fixed rate, fixed repayment option, 6-month separation period, and two disbursements: For a borrower with no prior loans and a 4-year in-school period, it works out to a 10.28% fixed APR, 51 payments of $25.00, 119 payments of $182.67 and one payment of $121.71, for a Total Loan Cost of $23,134.44. For a borrower with $20,000 in prior loans and a 2-year in-school period, it works out to a 10.78% fixed APR, 27 payments of $25.00, 179 payments of $132.53 and one payment of $40.35 for a total loan cost of $24,438.22. Loans that are subject to a $50 minimum principal and interest payment amount may receive a loan term that is less than 10 years. A variable APR may increase over the life of the loan. A fixed APR will not.
Variable APR
5.54-15.70%
Lowest rates shown include the auto debit. Advertised APRs for undergraduate students assume a $10,000 loan to a student who attends school for 4 years and has no prior Sallie Mae-serviced loans. Interest rates for variable rate loans may increase or decrease over the life of the loan based on changes to the 30-day Average Secured Overnight Financing Rate (SOFR) rounded up to the nearest one-eighth of one percent. Advertised variable rates are the starting range of rates and may vary outside of that range over the life of the loan. Interest is charged starting when funds are sent to the school. With the Fixed and Deferred Repayment Options, the interest rate is higher than with the Interest Repayment Option and Unpaid Interest is added to the loan’s Current Principal at the end of the grace/separation period. To receive a 0.25 percentage point interest rate discount, the borrower or cosigner must enroll in auto debit through Sallie Mae. The discount applies only during active repayment for as long as the Current Amount Due or Designated Amount is successfully withdrawn from the authorized bank account each month. It may be suspended during forbearance or deferment. Advertised APRs are valid as of 9/24/2024. Loan amounts: For applications submitted directly to Sallie Mae, loan amount cannot exceed the cost of attendance less financial aid received, as certified by the school. Applications submitted to Sallie Mae through a partner website will be subject to a lower maximum loan request amount. Miscellaneous personal expenses (such as a laptop) may be included in the cost of attendance for students enrolled at least half-time. Examples of typical costs for a $10,000 Smart Option Student Loan with the most common fixed rate, fixed repayment option, 6-month separation period, and two disbursements: For a borrower with no prior loans and a 4-year in-school period, it works out to a 10.28% fixed APR, 51 payments of $25.00, 119 payments of $182.67 and one payment of $121.71, for a Total Loan Cost of $23,134.44. For a borrower with $20,000 in prior loans and a 2-year in-school period, it works out to a 10.78% fixed APR, 27 payments of $25.00, 179 payments of $132.53 and one payment of $40.35 for a total loan cost of $24,438.22. Loans that are subject to a $50 minimum principal and interest payment amount may receive a loan term that is less than 10 years. A variable APR may increase over the life of the loan. A fixed APR will not.
Credible lets you check with multiple student loan lenders to get rates with no impact to your credit score. Visit their website to take the next steps.
Key takeaways
FFELP student loans are federally backed loans that were originally funded by private companies.
The FFEL Program ended with the 2009-2010 academic year to make way for Direct Loans, and some were purchased by the federal government.
There are two types of FFELP loans: commercially owned and federally owned.
Borrowers with FFELP loans may want to consolidate to take advantage of more student loan benefits including Saving on a Valuable Education income-driven repayment and Public Service Loan Forgiveness.
The education department is offering a one-time waiver of payment rules that will speed many FFELP borrowers toward forgiveness. It includes those with commercially held loans if they consolidate into a Direct Loan by April 30, 2024.
Get the scoop on student loans
Stay up to date on how student loan forgiveness and repayment may affect your finances.
The Federal Family Education Loan Program, or FFELP, provided student loans to borrowers until June 30, 2010. FFELP loans were issued by private and state lenders but guaranteed by the federal government. That means if a borrower defaulted, the government would pay private companies an interest subsidy to make up for the loss.
The federal government purchased some lenders' FFELP portfolios during the Great Recession. FFELP borrowers did not have a choice as to whether or not their loans were included in the purchases. Now some of this debt is owned by the government.
Although the federal government ended the FFEL Program more than a decade ago, there are still about 8.26 million borrowers with outstanding FFELP loans totaling $185.4 billion, as of Dec. 31, 2023, according to the Education Department.
If you have federal student loans from 2010 or earlier, they are likely FFELP loans. Some outstanding FFELP loans are held by the federal government (called ED-held FFELP loans), but most are still privately owned by companies, like the student loan servicer Navient.
The end of pandemic-era relief for FFELP borrowers
In March 2021, the Department of Education extended interest and collections relief to commercially held FFELP borrowers whose loans are in default. The relief measure was retroactive to March 13, 2020. Most of the benefits expired when federal student loan payments resumed in fall 2023:
Borrowers who made voluntary payments on these loans could request a refund of those amounts.
Guaranty agencies, which hold defaulted FFELP loans, were instructed to implement a 0% interest rate for borrowers.
Any loans that went into default during the pandemic were returned to good standing.
The department requested that credit bureaus remove the default from credit histories.
The relief did not apply to commercially held FFELP loans that were not in default.
Defaulted FFELP Loans and the Fresh Start Program
A one-time temporary program called Fresh Start halts collections and wage garnishment for individuals with defaulted federal student loans through Sept. 30, 2024. Tax refunds and Social Security payments will also not be withheld.
FFELP loans that were in default before the March 2020 are eligible to get their loans back in good standing through the the Fresh Start program. Borrowers must actively enroll in the program to lock-in these benefits. Collections will likely not restart on these loans until September 2024.
To access these programs, you’ll have to consolidate FFELP loans into a federal Direct Loan.
In October 2022 the department announced a one-time IDR waiver. You’ll need to consolidate your commercially held FFEL loans into a federal direct loan by April 30, 2024 to take advantage of the waiver. The Department expects to complete the adjustment by July 1, 2024.
Can (or should) I consolidate my FFELP loan?
You can consolidate a FFELP loan in many cases. You cannot consolidate into a direct loan if you already did a spousal consolidation — you can split your spousal consolidation loan up again if need be — or if you have active litigation or a legal judgment against you.
If you are eligible to consolidate, there are generally still some trade-offs. Consolidating FFELP loans into a direct loan will cause any unpaid interest to capitalize and increase your principal loan balance. Consolidation may also wipe out any progress you’ve made toward income-driven payment forgiveness.
But borrowers can avoid these consolidation downsides if they consolidate by April 30, 2024. Borrowers will need to do this to take advantage of the one-time IDR waiver that allows time in forbearance and some deferments to count toward income-driven loan forgiveness. This consolidation requirement applies only to commercially held FFELP loans; the account adjustment will be automatic for those with federal FFELP loans.
Navient aims to transfer FFELP loans to MOHELA
Navient, one of the servicers that manages commercially held FFELP loans, announced on Jan. 30, 2024 that it plans to offload its private and FFELP student loan portfolio to the servicer MOHELA.
The transfer is slated for the second half of 2024. Navient will retain ownership of the $38 billion FFELP portfolio, but MOHELA will manage operations and interact with borrowers.
Impacted borrowers can expect communications from Navient in the coming months about the planned servicer transfer. Borrowers will be able to use the same phone number and mailing address — and their loan terms, interest rate, account number and repayment plan will stay the same after the transfer, a Navient representative said.
Get the scoop on student loans
Stay up to date on how student loan forgiveness and repayment may affect your finances.