FFELP Loans: Forgiveness and Repayment Options

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FFELP loans qualify for federal student loan forgiveness programs and repayment options, but you may need to consolidate them into a Direct Consolidation Loan before they’re eligible for those benefits.

Federal Family Education Loans, also called FFEL Loans or “commercial loans,” are a type of federal student loan that were made by private banks and state lenders and insured by guaranty agencies and the federal government. If a borrower defaulted on these loans, the bank would receive an interest subsidy to help make up for its loss, and the loan would be sold to the guaranty agency or the Department of Education.

FFEL Loans are no longer given out, but there are still 10.6 million people who collectively owe $238.8 billion for these older loans.

Ahead, learn about FFEL Loans forgiveness and repayment options.

Key takeaways

  • All FFEL Loans are federal student loans.
  • FFEL Loans can be forgiven after 25 years of payments under eligible income-driven repayment plans.
  • Public service workers can get credit for payments made on FFEL Loans for a limited time.

What are FFELP Loans?

FFELP loans are loans that were made through the Federal Family Education Loan Program. They are also called FFEL and commercial loans. These types of student loans were made by private lenders and were insured by a guaranty agency. Although they were made by a private lender, all FFELP Loans are federal student loans.

What happened to FFEL loans?

The FFEL Program ended in 2010 when the Health Care and Education Reconciliation Act of 2010 passed. Congress replaced it with the Federal Direct Loan Program.

Before the it ended, borrowers could get five types of FFEL Loans:

  • FFEL Unsubsidized Stafford Loans
  • FFEL Subsidized Stafford Loans
  • FFEL Consolidation Loans
  • FFEL Joint Consolidation Loans
  • FFEL PLUS Loans (Parent PLUS and Grad PLUS)


Both FFEL and FFELP mean the same thing and are used interchangeably. The "P" is for program, as in Federal Family Education Loan Program. FFEL Loans are loans that are made under the FFEL program (FFELP).

How do I know if I have FFEL Loans?

If you have federal student debt from 2011 or before, it may be an FFEL loan. Although the federal government owns some outstanding FFEL loans, the majority are still owned by guaranty agencies like ECMC, Navient, and Trellis.

You can use the Federal Student Aid website, studentaid.gov, to see what kind of student loan you have and who holds it. Once logged in, click Dashboard > Loan Breakdown > Loan Details. You will then see a list of all of the federal student loans you borrowed and the current student loan servicer.

Learn More: How Do I Know If My Student Loans Are Federal?

What is the difference between FFELP Loans and Direct Loans?

FFELP Loans were loans that were made by private lenders and insured by the federal government. Direct Loans, on the other hand, are made directly by the Department of Education. During the coronavirus pandemic, many FFELP Loans continued to gain interest, and borrowers were still required to make payments. Meanwhile, all Direct Loans (whether in default or in repayment) were placed into forbearance, and the interest rate was set to zero.

FFELP Loans & the CARES Act

When Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020 and froze interest rates and payments for federal student loans, many FFEL Loan borrowers were left out of the relief. Interest kept accruing on their loans and they still had to make payments throughout the pandemic.

The reason why they were excluded is because even though FFEL Loans are federal loans, some are owned by a third-party. The government lacked the authority to temporarily change the repayment terms for loans it didn’t directly own.

The only FFEL Loan borrowers who benefited from the CARES Act forbearance were people who were in default, individuals whose loans were owned by the federal government, and borrowers who eventually consolidated their loans into a Direct Consolidation Loan to take advantage of the payment freeze.

FFELP Student Loan Forgiveness Programs

FFELP borrowers are eligible for the following student loan forgiveness programs:

  • IDR Loan Forgiveness forgives your remaining balance after you pay 15% of your discretionary income for 25 years of monthly loan payments under a qualifying repayment plan — Income-Based Repayment Plan or Income-Contingent 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 and PSLF

FFEL Loans do not qualify for the Public Service Loan Forgiveness Program. If you consolidate them into a Direct Consolidation Loan, however, the loans are now eligible for PSLF and the just-announced PSLF Limited Waiver Opportunity.

Although there is typically no way to receive credit towards forgiveness for the monthly student loan payments you made before you consolidated, the new PSLF Limited Waiver Opportunity allows people who had FFEL Loans and Perkins Loans to include their payments in the 120 qualifying payments needed for loan forgiveness.

The exemption also covers late payments, partial payments, and forbearances made for active-duty service members.

Learn More: Do FFEL Loans Qualify for PSLF

Will FFEL loans be forgiven?

If President Joe Biden forgives $10 thousand or $50 thousand in student loan debt, FFEL Loans owned by the US Department of Education will likely be included. It is not clear if he will also do it with other types of FFEL Loans.

Learn More: $10,000 Student Loan Forgiveness

FFEL Repayment Options

FFELP student loans are eligible for:

  • The income-based repayment and income-contingent repayment plan.
  • the CARES Act interest rate and payment freeze, but only if the Department of Education has the loan.
  • Deferment and forbearance.

In addition, student loan borrowers with good credit scores and incomes can refinance loans with a private lender, although refinancing may not save you much money on interest since many FFEL Loans have low rates. Plus, turning a federal student loan into a private one can mean that you won't have access to certain repayment plans based on your income (e.g., IBR) and student loan forgiveness.

Learn More: How Does Refinancing Student Loans Work?

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.

UP NEXT: Update on Student Loan Pause Extension

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