A unique public-private partnership in which lenders–private, nonprofit and state-based– make federally guaranteed loans to students and parents. FFELP (Federal Family Education Loan Program) makes it possible for borrowers with no income, credit history, cosigner or collateral to get student loans at low interest rates.
Since 1965 the guaranteed student loan program has made the dream of college a reality for more than 60 million Americans. In 2007-08, FFELP served more than 6.4 million students and parents at 5,000 postsecondary institutions, lending a total of $55.3 billion (or 78% of all new federal student loans).
Schools choose which loan program–either FFELP or the Federal Direct Loan Program–best serves their students' needs. FFELP is the overwhelming favorite of schools: About 83% nationwide (roughly 5,000 schools) participate in FFELP.
FFELP is the only federal student loan program that offers borrowers a choice of lenders.
Choice means competition, better service, innovation and lower-cost loans. Paying for college is then more convenient, reliable and affordable for families:
- Innovation: Loan providers are on the cutting edge of online solutions that help students manage their loans at their convenience, 24/7, year-round.
- Service: Online solutions mean students and loan providers can make efficient and immediate updates to borrowers' accounts.
- Affordability: Until the recent deep cuts in program, most lenders paid some or all of the up-front fees for borrowers or offered discounts on the interest rates set by Congress.
FFELP loan providers do more than just make loans– they offer students and families free financial aid education:
- College awareness programs
- College nights
- Financial aid seminars
- Debt management workshops
- Default avoidance counseling
These programs focus on increasing college awareness and access, along with strategic federal, state and local partnerships.
State-based and nonprofit guaranty agencies are FFELP loan providers, some actually predate the federal student loan program. These organizations have deep roots in their communities. They also include a wide range of education and finanical institutions:
- Large, money-center banks, regional banks and community banks
- Credit unions
- Nonprofit lenders and secondary markets
- Smaller, newer firms that mostly offer consolidation loans
Learn more about FFELP: