Most federal student loans were paused during the pandemic. If you’ve had to make payments, you might be surprised to find your loan listed on studentaid.gov.
You had to keep making your monthly payment because you’re one of 6 million people whose loans were made under a federal program that the Obama administration phased out.
For decades, federal student loans were insured by the government but made by banks and other financial institutions. In 2010, Congress replaced it with a system in which the Education Department created loans (i.e., the Direct Loan Program). During the Great Recession, the government bought some, but not all, of the loans it insured.
Now, there are two groups of federal loans:
Student loans that are owned directly by the U.S. Department of Education, e.g., Federal Direct Loans.
Student loans that are owned by a guaranty agency and insured by the federal government, e.g., Federal Family Education Loans, Stafford Loans, etc.
The first group has had their interest rate set to 0% and payments frozen through September 1, 2022. They’ve also received credit towards Public Service Loan Forgiveness and income-driven repayment plan forgiveness.
The second group, borrowers with FFEL Loans, didn’t get these benefits. They had to continue making payments even as COVID-19 rocked the country because their loans were owned by a private lender — not the Education Department.
Federal student loan types:
Direct Subsidized Loans
Direct Unsubsidized Loans
Direct Consolidation Loans
Direct PLUS Loans, including Parent PLUS Loans
Federal Family Education Loans, including Joint Spousal Consolidation Loans
Learn More: Federal vs. Private Student Loans