What is the difference between ffel and direct loans

Just be careful not to consolidate other types of loans e. Stafford , or it will taint your ability to get IBR for those other loans. If you would like more information about student loans, you can dowload my free book, I Graduated; Now What?

If you live in southern New Jersey and would like to consult with me on your loans, please feel free to call my office at or contact me through this site to schedule an appointment in my Woodbury office to discuss your case. FFEL v. What Is the Difference? Want to Know More? Some lenders were not banks or credit unions. Some non-profit agencies, finance companies, and state agencies also got involved with this student loan program. Most of the benefits that are found in the FFEL loan program are also found in the Direct loans program.

The one disadvantage is that FFEL loans do not qualify for any type of loan forgiveness. You may be asked to consolidate all your loans into a new Direct loan program to qualify for loan forgiveness if you have FFEL and Direct loans. In this situation, you may have your 5-year or year clock reset. It was actually more difficult to qualify for FFEL loans when this program was active compared to the Direct loan counterparts.

The reason for the difference in denials was that the law allowed private lenders to apply restrictive standards to their loan products in ways that are similar to traditional lending products, like a loan or a credit card.

Some schools only participated in one program, which was an advantage for some FFEL loan recipients. For students who went to college between , qualifying for the FFEL loan meant your credit was reasonably good, there was confidence in your studies, and you could pay for your tuition and education-related expenses.

The primary advantage of being involved with the Direct Loan program is that student borrowers are eligible for public service loan forgiveness.

To qualify for loan forgiveness, the student borrower must work in a public service job for a minimum of 10 years. They must also repay their loans during this time through an eligible repayment plan.

After 10 years of being employed and making successful payments, the remaining balance on their student loans would be canceled. This program only benefits borrowers who would still owe money on their loans after 10 years of employment, which means individuals with low income relative to their debt and qualifying income-driven repayment plan individuals are the most likely to use it.

This forgiveness plan covers all types of Direct loans, including consolidation loans. Student borrowers are even permitted to consolidate their FFEL loans into Direct loans to qualify for this benefit. You must not be in default and make monthly payments on your loans after October Your job must be full-time employment, defined as working an annual average of 30 hours per week, or the number of hours your employer considers full-time employment.

Teachers who received a student loan after October 1, and teach full-time for 5 consecutive years at a qualifying school may be eligible to have a portion of their loans canceled. This benefit applies to FFEL loans as well. Direct Subsidized Loans Undergraduate students who can show they need financial help can get this kind of loan. The government pays the interest on a Direct Subsidized Loan during the following periods: while you're in school at least half-time during the grace period in most cases , and during a period of deferment when loan payments are postponed.

Direct Unsubsidized Loans With an unsubsidized loan, you—not the government—pay the interest during all periods. Direct PLUS Loans Direct PLUS Loans are available to: graduate or professional students who are enrolled at least half-time at a school with a program leading towards their graduate or professional degree or certificate and to parents of a dependent undergraduate student enrolled at least half-time at an eligible school.

Direct Consolidation Loans With a Direct Consolidation Loan , you can combine consolidate your federal education loans into one loan. Federal Perkins Loans Perkins Loans were previously available to undergraduate, graduate, and professional students who had exceptional financial need.

Federal Student Loans: Pros and Cons Federal student loans have many advantages when compared to private student loans and just a few disadvantages. Advantages Federal student loans are almost always a better choice than private student loans. Here's why: Federal student loans have generous and flexible repayment options that can lower your monthly payment.

Federal student loans have various cancellation options. As of , all federal student loans have fixed interest rates. Federal student loans are eligible for deferment and forbearance. While private student loans require either a good credit history or a co-signer with a good credit history, federal student loans generally do not.

Federal student loans can be consolidated into a Federal Direct Consolidation Loan. Private student loans can't be consolidated into this kind of loan. Federal student loans don't have a prepayment penalty fee.

If you pay off your loans early, you won't have to pay extra fees. Disadvantages If you go into default on a federal student loan, the federal government has more options to collect from you than a private lender. How Private Student Loans Work A private student loan is a loan taken out from a bank, credit union, or another private lender to cover post-secondary education expenses and, if taken out before July 1, , not guaranteed by the federal government.

Private Student Loans: Pros and Cons Private student loans have a few upsides, but for the most part, the long list of downsides outweighs them. Advantages The main advantage of private student loans is that they're available when you've exhausted your ability to borrow federal loans. Disadvantages The biggest downsides to private student loans are: higher interest rates typically the interest rate might be variable less flexible repayment terms, and the unavailability of deferment, forbearance, and cancellation options.

Borrowers with private student loans have cited numerous problems related to making loan payments, like dealing with loan servicers that: frequently lose payments misapply funds when borrowers try to pay down their loans more quickly fail to notify customers when accounts are transferred to new servicers, and engage in other practices that undermine borrowers' ability to get information about and pay their loans.

Getting Help To learn more about federal student loans—and student loans in general—visit the U. Talk to a Lawyer Need a lawyer? Start here. Practice Area Please select Zip Code. How it Works Briefly tell us about your case Provide your contact information Choose attorneys to contact you.

Dealing with Debt and Creditors.