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Lenders that participate in FFELP offer federally guaranteed loans to both students and their parents. The main federal education loan for students is the Stafford loan, of which there are two types. Parent loans are called PLUS Loans.
Stafford Loans
- Subsidized Stafford Loans for students who meet a financial needs test. The federal government pays all interest costs for subsidized Stafford borrowers while borrowers are in school and during grace and deferment periods. In academic year 2007-08, an estimated $22.7 billion in subsidized Stafford loans were made to 4.9 million borrowers.
- Unsubsidized Stafford Loans for students who do not meet the financial needs test or who need to supplement their subsidized loans. Borrowers may defer payment of interest during school, grace, and deferment periods, but they remain responsible for all interest that accrues. In academic year 2007-08, an estimated $23.0 billion in unsubsidized Stafford loans were made to 3.9 million borrowers.
PLUS Loans
- Federal PLUS Loans are available to parents of dependent undergraduate students and graduate and professional degree students. During 2007-08, an estimated $9.6 billion in PLUS loans were made.
- Eligible parents and students may borrow up to the cost of attendance, minus financial aid from other sources.
- Currently, the maximum interest rate of PLUS loans is 8.5 percent. For loans made before July 1, 2006, the interest rate remains variable, but capped at 9 percent.
- Beginning July 1, 2008, parents will be allowed to defer payments on a PLUS loan until six months after the date the student ceases to be enrolled at least half time.
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FFELP 2007-08
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Type of Loan
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# of Borrowers
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# of Loans
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Loan Volume
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Stafford subsidized
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4.9 million
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6.0 million
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$22.7 billion
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Stafford unsubsidized
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3.9 million
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4.9 million
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$23 billion
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PLUS
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659,000
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817,000
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$9.6 billion
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Total Amounts
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6.4 million (unduplicated)
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11.7 million
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$55.3 billion
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Consolidation Loans
- Federal Consolidation Loans are designed to help borrowers manage their loan debt by combining all eligible loans into a single, new guaranteed FFELP loan with a longer repayment term, a fixed interest rate, and a smaller monthly payment.
- Due to extended repayment periods, total payments made by consolidation borrowers for the life of these loans are generally greater than those made by borrowers with standard repayment periods.
- In 2007-08 participating lenders made an estimated $29.8 billion in federal consolidation loans.
Learn more about FFELP:
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