What's the difference between Direct Loans, Stafford Loans, and FFEL Loans?

 

It can be confusing to keep track of different kinds of student loans; here are key differences.

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Most existing federal student loans came from just two loan programs: the William D. Ford Federal Direct Loan Program or the Federal Family Education Loan (FFEL) Program. The FFEL program was canceled as of July 1, 2010, which means that loans made on or after that date are Direct Loans. Loans made between August 10, 1993 and July 1, 2010 may be either FFEL or Direct Loans, depending on the lender.
 
The basic difference between the two federal loan programs is that Direct Loans are funded by the U.S. Department of Education. FFEL Loans, on the other hand, came from private lenders. Those older loans were backed up ("guaranteed") by the federal government.
 
Types of FFEL Loans. The FFEL program was created in 1965. Under the program, student or parent borrowers may have received one or more of the following types of loans: Subsidized or Unsubsidized Stafford Loans (formerly known as Guaranteed Student Loans (GSLs) or Federal Insured Student Loans (FISLs), Federal PLUS Loans or Federal Consolidation Loans. Many FFEL loans have been sold to the U.S. Department of Education, so you may be currently paying off FFEL loans as if they were direct loans.
 
Types of Direct Loans. The Direct Loan program was created in 1993. Under the Direct Loan program, you may have received one or more of the following types of loans: Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, or Direct Consolidation Loans. Direct Subsidized or Unsubsidized Loans were sometimes called "Direct Stafford Loans," but that terminology is not used for newer loans. You will repay these loans directly to the U.S. Department of Education.

How to Get Information About Your Loans

To find out what type of loan you have and learn more about its terms, see What If I Don't Know What Kind of Loan I Have?

Learn More

For a detailed history of federal student loan programs, we like this article from the Federal Education Budget Project of the New America Foundation. 


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Jurisdictional relevance: US

Legal Consumer - Castleford, IDLaw. The content of this article pertains to all US states and counties.