Q: What are FFELP Loans and how to get loan forgiveness?

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Federal Family Education Loan Program Loans are federal student loans. Undergraduate students and parents could borrow FFELP loans through June 2010.

The federal government replaced the FFELP Program with the Federal Direct Loan program.

Although new loans are no longer being made under the FFEL Program, many borrowers still owe balances on FFEL Loans. Here's a guide to your FFEL Loan repayment and forgiveness options.

What is an FFELP Loan?

FFEL student loans are made under the Federal Family Education Loan Program to pay higher education costs. They were originally made by private lenders, guaranteed by a guaranty agency, and backed by the federal government.

There are 5 different types of FFEL Loans:

  1. FFEL Unsubsidized Stafford Loans
  2. FFEL Subsidized Stafford Loans
  3. FFEL Consolidation Loans
  4. FFEL Joint Consolidation Loans
  5. FFEL Plus Loans (Parent Plus and Graduated)

Although the FFEL Program ended in June 2010, loan balances remain outstanding.

Some FFEL Loans are currently owned by private guaranty agencies, and others are owned by the Department of Education.

Are my loans FFEL Loans?

Chances are that if you borrowed federal student loan debt before 2011, you might have FFEL Loans. You can find out the type of federal student loans you have by visiting the Federal Student Aid website, studentaid.gov.

The current FSA website has replaced the National Student Loan Data System, nslds.ed.gov.

You can also call your current student loan servicer.

Note. If your loan servicer says that your loan is a commercial loan, they likely are referring to an FFEL Loan, which was made by a commercial (private) lender.

Are my FFEL Loans federal or private?

FFEL Loans are federal student loans that were made by private lenders. However, many FFELP Loan borrowers are confused by whether their loans are federal are private because Sallie Mae, which also makes private student loans, was their loan servicer.

When the FFELP Program ended, Sallie Mae assigned loan servicing duties for FFELP borrowers to Navient.

Are FFELP Loan payments suspended?

FFELP Loan payments are suspended if the loans are owned by the Department of Education. FFELP Loans are not suspended if (a) the loans are owned by a guaranty agency and (b) are in good standing. The federal government did not include that subset of FFELP Loans when it passed the CARES Act and placed most federal student loans into deferment/forbearance, and set the interest rate to 0.

However, as the coronavirus/COVID-19 pandemic has continued, the Department of Education has extended those protections through September 2021 for FFEL Loans that are in default. As a result, no collection activity can occur on defaulted FFELP Loans until October.

In addition, FFEL Loans that went into default on or after March 13, 2020, will:

  • be returned to good standing
  • be assigned to the Department of Education
  • have the default status removed from the credit report bureaus.

Will FFEL Loans be forgiven?

FFEL Loans owned by the U.S. Department of Education will likely be included in loan forgiveness passed by President Joe Biden. The same can't be said for FFEL Loans owned by guaranty agencies. It's unclear that the Biden Administration will extend student loan forgiveness to those loans.

Are FFEL Loans eligible for forgiveness?

FFELP borrowers are eligible for the following loan forgiveness programs:

  • Income-Based Repayment (IBR) Plan Forgiveness: forgives your remaining FFELP Loan balance after you pay 15% of your discretionary income for 20 to 25 years of monthly payments under a qualifying repayment plan.
  • Teacher Loan Forgiveness: forgives up to $17,500 for teachers who teach full-time for five complete and consecutive academic years in a low-income elementary school, secondary school, or educational service agency.
  • Closed School Discharge: forgives the FFEL Loans you borrowed if your school closed while you were enrolled or soon after you withdrew.
  • Total and Permanent Disability Discharge: forgives your student loan debt if a doctor or the Social Security Administration or Veterans Administration determines you are totally and permanently disabled.
  • Bankruptcy Discharge: gets rid of your student loans if you can prove that repaying your loans causes you an undue hardship.

FFEL Loans are not, however, eligible for the Public Service Loan Forgiveness Program without consolidation. More on that below.

Do FFEL Loans qualify for PSLF?

FFEL Loans qualify for the PSLF if you consolidate them into a Direct Consolidation Loan. Absent consolidation, FFEL Loans aren't eligible for the Public Service Loan Forgiveness Program.

The PSLF Program offers forgiveness to public service employees with Federal Direct Loans.

FFEL Consolidation Loan forgiveness options. If you have an FFEL Consolidation Loan, you can gain eligibility for the PSLF Program by consolidating your loan a second time into a Direct Consolidation Loan. You can consolidate an FFEL Consolidation Loan by itself. You don't need a second federal student loan to consolidate it with.

There's no way to receive credit toward PSLF for the monthly student loan payments you made on your FFELP Loan.

Want help with your FFELP Loans? Let's talk

If the different treatment for FFEL Loans seems dizzying, I'm here to help. For years, I've helped people like you develop strategies for their federal and private student loans.

Schedule a free 10-minute call with me today. We'll work together to develop a plan that fits your current financial situation and sets you up to meet your future goals.

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