Direct Loan For Student Financial Aid

Admin | December 16, 2011 | Comments Off

Direct Loan For Student Financial Aid

Direct Loan For Student Financial Aid

[Author's note: since passage of the the Health Education Reconciliation Act of 2010 on March 26, 2010, PLUS loans and Stafford loans are no longer offered through the now defunct FFEL program. This article is meant as a consumer resource showing what lending was like before student loan reform took effect.]

Correctly choosing the federal student loan that best fits one's financial needs requires understanding the different kinds which exist in the marketplace. This article will explain the two large federal student loan programs—the Federal Family Education Loan Program (FFEL) and the William D. Ford Federal Direct Loan Program (FDLP, or Direct)—as well as the difference between subsidized and unsubsidized student loans.

Federal Student Loans – FFEL Loans

FFEL loans are federal student loans offered by private financial institutions, such as Citi and Chase, and backed by the federal government, thus minimizing the risk for private lenders. Of the two student loan programs, FFEL loans account for nearly 80% of federal student loans, making it by far the largest lending program for students.