Federal Family Education Loan Program (FFELP)

When it comes to college aid, the leading source of federal finance is the federal family education loan program (FFELP). This program was created in 1965 by the congress. It is a tie up between the public and private. It gives loans to both the students and parents. Millions of students and parents have benefited by this program.

What are the loans provided ?

When it comes to postsecondary education, the FFELP has a variety of loan programs that can be listed below :

1. Stafford Loans : These loans form the largest part of this program. Nearly $50 billion a year goes as aid from these loans. Any student who can prove what he or she is in financial need can avail of this loan. These loans are of two types :
a) Subsidized Stafford Loans-These loans are available only to those students who are in financial crunches. In this, the government pays the interest on these loans :
• when the student is in school
• for six months after he leaves school and
• whenever there is a loan deferment.

Though this is very advantageous, the ability of proving your financial need rests on you.

b) Unsubsidized Stafford Loans-These can be availed by anyone. There is no need to prove the financial necessity. But, the burden of paying interest falls on the borrower and not on the government.
2. PLUS Loans : Approximately $8.3 billion goes out in this form every year to parents. Parents Loan for Undergraduate Students (PLUS) is a loan that parents can avail for their children. Even after scholarships and other financial aid, there may be a portion of the educational cost that cannot be filled up. This gap can be bridged by using these loans.
3. Federal consolidation Loans : Money is not only need for tuition but also for exam fees, books, lodging and so on. Thus, various loans keep getting accumulated. All the federal loans can be combined into one with a single monthly installment. Also, based on your financial situation. You can increase the term and reduce the monthly outflow.

Always plan and budget your finances and think before you avail a loan. Do all the paperwork properly and keep the documents handy. Then, your FFELP will be a breeze.