Currently, the upfront fees that are set by Congress on all new Stafford loans total 2.0 percent(1 percent of which is a default fee that is the responsibility of the guarantee agency).
Because of competition in FFELP, many loan providers pay part pr all of these fees for borrowers, although fewer do now due to deep budget cuts in FFELP.
Under a 2006 law, total upfront fees will be largely phased out over the next several years, as follows:
- To 1.5% for loans disbursed on or after July 1, 2009
- To 1% for loans disbursed on or after July 1, 2010
The same law created parallel fee structures for FFELP and the Federal Direct Loan Program.
Learn more about FFELP: