Written By Kevin Payne
Despite the FFEL program ending in 2010, over nine million borrowers still owe $190.9 billion of FFEL student loan debt as of September 2023. Luckily, the most generous FFEL forgiveness program ever created is available for all FFEL borrowers until April 30, 2024. It's called the “IDR Waiver.”
Many borrowers with FFEL loans could see their entire balance forgiven under this program from the Biden administration. Other borrowers will get 10+ years closer to forgiveness. As you might know, FFEL loans do not normally qualify for many of the best government student loan programs, so you probably need to consolidate to benefit.
There are also FFEL loan forgiveness options outside of the temporary IDR Waiver. Here’s everything you need to know about FFELP loans, your repayment options, and your best options for receiving FFELP loan forgiveness.
Read our guide to FFEL loans below, and know that we can help you navigate your potential savings if you want.
What is an FFELP loan?
In reading this article, it would be helpful for you to know what kind of FFELP loans you have. Here are the two different types:
- Commercially-owned: If you were required to make payments during the pandemic payment pause from March 2020 to September 2023, you have commercially owned or commercially held FFEL loans. These are guaranteed by, but not owned by, the government.
- Department of Ed-owned: If you received 0% interest and were not asked for payments during the pandemic payment pause, you have Department of Education-owned FFELP loans. The government owns these loans.
The Federal Family Education Loan Program (FFELP) was created as a student loan program backed by the federal government. It began as part of the Higher Education Act of 1965 and was officially launched in 1966. Through the program, private lenders provided student loans to students and parents backed by federal or nonprofit guaranty agencies. The government-mandated specific interest rate levels for all FFEL loans.
The terms “FFELP loans” and “FFEL loans” are often used interchangeably to refer to Federal Family Education Loan Program loans. There are four types of FFEL loans that were available to student loan borrowers during the program’s existence:
- Subsidized Stafford loans: Interest is paid by the government while students are in school and during periods of grace and deferment.
- Unsubsidized Stafford loans: Interest isn’t paid by the government at all.
- PLUS loans: Available to parents and grad students to help pay for education costs.
- Consolidation loans: Combines more than one student loan into one single loan.
Since 1966, over 60 million Americans have used FFEL to help pay for college expenses. The program was discontinued on July 1, 2010, and no FFELP loans have been made since.
ED-owned vs. commercial-owned FFELP loans
In response to the 2008 financial crisis, the Department of Education purchased some FFELP loans from private lenders to ease some of their liquidity concerns.
However, the government didn't purchase all of the FFEL loans. It effectively split FFEL loans into two camps: loans repurchased by the Department of Education (ED-owned FFEL loans) and those that were not (commercially-owned FFEL loans).
In 2010, the FFEL program was fully replaced by the federal Direct Loan program. This is the current student loan program run by the federal government. The main difference between these federal loans is that Direct Loans are funded by the U.S. Treasury directly instead of through private lenders.
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FFELP loan forgiveness options
The good news is that you can qualify for FFELP loan forgiveness through a few options. Here are three programs worth looking into if you have large amounts of FFEL student loan debt.
Public Service Loan Forgiveness (PSLF)
Public Service Loan Forgiveness may be an option for people with FFEL loans if those loans are consolidated into Direct Loans. Federal student loan borrowers pursuing PSLF can have any remaining student loan balance forgiven after 120 qualifying payments (which don’t have to be consecutive) while working full-time for a qualifying employer.
Please note that any previous payments made while loans were still under the FFEL program won't count toward the 120 qualifying payments under normal eligibility procedures. Borrowers would normally be starting from scratch after Direct Loan consolidation. To get approved for PSLF, you must be on a qualifying repayment plan, which includes these income-driven repayment (IDR) plans:
- Pay As You Earn (PAYE)
- Saving on a Valuable Education (SAVE), formerly called REPAYE
- Income-Based Repayment (IBR)
- Income-Contingent Repayment (ICR)
The standard 10-year repayment plan also qualifies for PSLF. But if you’re on the standard repayment plan for the full 10 years, there will be very little or no debt left to forgive. To apply for PSLF, you must fill out the Public Service Loan Forgiveness Application for Forgiveness.
Editor's note: You can consolidate FFEL loans into Direct loans on studentaid.gov until April 30, 2024, and receive credit for all payments made prior to consolidation thanks to the IDR Waiver.
Teacher Loan Forgiveness
FEELP loans qualify for the Teacher Loan Forgiveness program “out of the box.” In other words, you don't have to take out a Direct Consolidation loan to become eligible for FFELP loan forgiveness.
The Teacher Loan Forgiveness program offers up to $17,500 of student loan forgiveness for highly qualified teachers who work full-time for five years at an elementary school, secondary school or educational service agency that serves low-income students. Unlike the PSLF program, the five years of service must take place consecutively.
To be considered a “highly qualified teacher,” you must teach mathematics, science or special education at one of the schools listed in the Teacher Cancellation Low Income (TCLI) Directory. If you're not a math, science or special education teacher, you could still receive up to $5,000 in loan forgiveness.
Forgiveness through income-driven repayment
The income-driven repayment plans mentioned above are another FFELP loan forgiveness option. Your remaining student loan debt can be forgiven in 20 or 25 years if you're on an IDR plan. This is a great loan forgiveness option if you don't qualify for PSLF or aren’t interested in working in a low-income area of need or nonprofit organization.
To repay student loans using PAYE, SAVE or ICR, you must consolidate your FFEL loans into a Direct Consolidation Loan. If you don't consolidate your FFEL loans, IBR is the only IDR option. With IBR, monthly payments will generally be 15% of your discretionary income but never more than payments under a 10-year Standard Repayment Plan. However, other IDR repayment options offer payments as low as 5% of your discretionary income.
The IRS views forgiven federal student loans in the IDR program as taxable income. However, the tax has been temporarily waived. Student debt discharged by the federal government will not be subject to federal income taxes until 2025.
Importantly, all FFEL borrowers can currently consolidate into a Direct Loan on the government's website and all prior payments will count towards IDR forgiveness. Since all FFEL loans are at least 12 years old, this will allow most borrowers to gain at least 12 years of repayment credit for forgiveness under an IDR plan.
As much as $211 billion could be cancelled immediately this way, as millions of borrowers have debt that's been around for at least 20 years.
This is why you could benefit from professional help from a group like ours. We'll answer two crucial questions to know if you'll benefit from the IDR Waiver if you have FFEL loans:
- Will you receive immediate cancellation?
- If not, how much credit will you receive under the IDR Waiver, and will IDR forgiveness be the right plan for you once the account adjustment occurs?
Other loan repayment options for FFEL loans
Don't qualify for FFELP loan forgiveness? Or perhaps you don’t want to carry student loan debt for 20 to 25 years? There are other options for repaying your FFEL loans.
All repayment programs are unique and have pros and cons to consider. Take the time to become familiar with your options before making a decision so you end up with the repayment plan that is right for you.
Lower student loan payments through the Extended Repayment Plan
One way to reduce student loan payments on FFELP loans is by applying for the Extended Repayment Plan. Loan payments in the Extended Repayment Plan are spread out over 25 years. You also can choose between two types of payments: fixed or graduated monthly payments:
- Extended Fixed monthly payments would stay the same amount for the life of your loan.
- Extended Graduated monthly payments would start lower, but the amount would increase every two years for the life of the loan.
Payments would be much lower than your standard 10-year federal student loan. For example, let's say you're an Arizona resident who graduated from a four-year for-profit private school with $34,722 in student loan debt at 3.900% interest. With the 10-Year Standard Repayment Plan, your monthly payments would be $350.
If you chose the Extended Fixed repayment plan, your monthly payments would stay at $181 for the entire 300 months. And if you went with the Extended Graduated plan, your payments would start out at $113 monthly but reach $328 by your last monthly payment.
Apply for the Graduated Repayment Plan
Don’t like the idea of spreading out your FFEL loan payments over 25 years? The Graduated Repayment Plan allows you to lower your monthly payments initially, and then they increase every two years for 10 years (except with consolidation loans).
The idea is that your salary will potentially increase as you work longer. The Graduated Repayment Plan is structured with that in mind, assuming you will be able to afford higher student loan monthly payments as you get further into your career.
Income-sensitive repayment (ISR)
Another repayment option for people with FFELP loans is the Income-Sensitive Repayment Plan. This plan is not as well known as some other repayment options. That's because it's only available to people with FFEL loans. With this plan, your monthly payments increase and decrease based on your annual income.
This plan lasts for a maximum of 10 years. So if you choose lower monthly payments early on, your payments could be extremely high toward the end. ISR monthly payments must at least cover the interest that accrues on your loan every month. You’ll need to reapply annually with your current gross monthly income so payments can be calculated correctly.
Loan consolidation
If you have more than one FFELP loan, you could save money by consolidating your student loans. When you consolidate your loans, you end up with one loan payment and one interest rate. Tracking one payment is much easier than multiple student loan payments.
Consolidating your loans doesn’t automatically save you money, though. When you consolidate FFEL loans, your new interest rate is the weighted average of your previous loans’ rates. Any savings would be dependent on what interest rates you had on your loans originally.
If you consolidate your loans to a Direct Consolidation Loan, you have the option to also apply for one of the IDR plans mentioned earlier. Switching to a Direct Consolidation Loan and pairing that with an IDR plan will significantly lower your monthly loan payments.
When to refinance your FFEL loans
Are you looking to lower your student loan payments and pay off debt faster? Consider refinancing your FFEL loans if you can not benefit from other forgiveness options. Double-check to make sure forgiveness is not possible for you before doing this since most FFEL borrowers will be able to save a significant sum of money by not refinancing and seeking federal relief options instead.
When refinancing student loans, your repayment term and interest rate depends on your credit history, current salary, and debt-to-income ratio. But if you have good to excellent credit, you could qualify for a lower interest rate and potentially save thousands of dollars.
One caveat to refinancing student loans is that your federal FFEL loans will become private student loans. Because of this, you will lose several protections built in by the federal government. Those protections include:
- Loan deferment
- Loan forbearance periods
- Access to IDR programs
- Access to the IDR waiver
Borrowers with poor credit may likely need a cosigner with excellent credit in order to qualify for student loan refinancing. But be aware that cosigners are on the hook financially if you default on your student loans. Be sure you can make your payments on time so you don’t cause them any financial harm.
Remember, DO NOT refinance if you could qualify for the limited time IDR waiver mentioned above.
Get help with choosing the right repayment strategy for your FFELP loans
Wondering whether refinancing is right for you? Take our refinancing quiz to find out. Through our refinancing quiz, you’ll learn what plans and lenders are the right fit for you.
Just because your FFEL loans are an older program that's no longer available doesn’t mean you aren’t still dealing with the challenges of paying off student loan debt.
Consider speaking to a Student Loan Planner® consultant to learn about your FFELP options and put together a student loan forgiveness plan. It’s our goal to help you move past your student loan debt as quickly and efficiently as possible. It’s one of the most important financial decisions you'll make, so let us help you make the best choice.
Do you have FFELP loans? What has been your experience with them?
Not sure what to do with your student loans?
Take our 11 question quiz to get a personalized recommendation for 2024 on whether you should pursue PSLF, Biden’s New IDR plan, or refinancing (including the one lender we think could give you the best rate).
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I was approved for the TPD and after the 3 years waiting period it was NOT paid off, on top of that I was told from the furst day you apply for TPD you payments are put on hold even during the 3 years waiting period but they have still taken $100 a month from my disability checks for OVER 20 YEARS and say I still Owe this is a scam, do NOT get a student loan, they are locking you into a lifetime of “Financial Slavery” just like Child Support. No matter how hard you try they wil own you for the rest of your life! SLAVERY!
What is your feeling on the loan forgiveness that may come in January?
It depends on so many factors, so I’m not sure yet.
Alright… here we go.
I met my current wife in high school, but we did not remain together. We each married and had children. Then about 10 years ago, we connected again. My three children and I moved in with her and her three children. We managed our money more or less independently like roommates where I payed her for half of living costs. She payed her debt and I payed mine. We eventually married in the summer of 2016. It wasn’t until March of 2017 that we sat down and looked at her debt together. Long story short, I had to get a personal loan to pay her credit card debt and we did not even look into her student loans at the time. I have always payed for all Christmas costs, all vacation costs, home repairs, most restaurant visits, and all credit expenses aside for the mortgage (part of living costs and split)
I have more or less considered her fiscally responsible. She started as a teacher in 2009 and received FFELP loans and a smaller private loan from AES. She never consolidated and I am just now finding out that she could have had this forgiven after this school year. Her balance on the FFELP is just over $30k and the AES loan is just over $3k. It appears that if we consolidate to a federal loan now, she can get it forgiven after ANOTHER 120 payments. I lost my job making about 60% of the household income back at the end of March and after her student loans and teaching license costs, her net income is only about $24k. We have only survived due to unemployment. I am so furious and broken. Do you have any additional hope for me?
I’m so sorry you’re in this situation. There’s so much missing information about student loan repayment. It’s tough to realize the loan could have been forgiven, but it can’t because of x, y or z. But there is hope. It might make sense to go after PSLF even now after all this time. I definitely recommend reaching out to book a consult appointment with someone on our team. They work with teachers all the time.
My thoughts are full of frustration. My loans first went into repayment in 2003. When legislation for PSLF came on the scene in 2007, I immediately completed paperwork to certify my employer hoping 2017 was a light at the end of the tunnel. After myriad phone calls to servicer and program assistance over the years, never since then has a single person I have talked to at my servicer or otherwise directed me that I needed to consolidate and change servicer to have my now 17 years of payments count towards PSLF. So I am now consolidating and starting qualifying payments completely over again despite being in certified public service my entire career of 20 years. I will have made payments for at least 27 years when/if I ever qualify. I’m disgusted. The whole program and its administration has been a convoluted fiasco at the expense of public servants willing to sacrifice their careers for the greater good.
I understand your frustration. Unfortunately, your situation is common. There isn’t enough information out there for borrowers to make the right choices. When you certify with PSLF, you should get a statement each year with an updated count of qualifying PSLF payments. If you have FFEL loans, they don’t qualify (as you now know).
I have one private FFEL and have been told there is nothing I can do about it. Great.
I consolidated my FFEL loans to one loan back in 2004. It was a big one so I’m still paying for it. Can this one loan be converted to a direct loan? I am concerned if there is student loan forgiveness coming down the pike, my loan won’t count as it is currently categorized.
It can be converted, but there are consequences to consider depending on your situation. I’d recommend taking with a consultant to get a customized solution.
I started getting FFEL loans on 2006. Started repaying in 07. In 2002 I returned to
School a d graduated in 2006 again taking out loans every semester. I then deferred them as often as I could and began consistently repaying in 2012. I am getting no where. They are stafford/nonstafford consolidated loans. If there is student loan forgiveness would mine be forgiven?? They have not been deferred during this pandemic for whatever reason.
Most FFEL loans aren’t held by the Dept of Ed, so that’s why they don’t qualify for the pandemic payment and interest pause. We recommend anyone who still has an FFEL loan to book a consult with us. There’s almost always a better way to repay your student loans and FFEL loans don’t qualify for many of the repayment and forgiveness programs.
I have a parent plus FFELP loan from 2009/2010 and thought all this time that it was a federal loan. I deferred payment on it (big mistake) and when I started paying, the loan practically doubled due to interest. I keep getting requests from Navient (my lender that I don’t even know how I got) and others to refinance to a lower rate. Just what do you lose in this situation since the federal side of it seems to only help the lender?
Hi Ellen, we are so sorry to learn this. Getting this decision right could mean thousands of dollars in savings, so if you took out student loans before 2010, consider hiring one of our professional consultants for expert advice.
I do want to leave you with some blogs to read. If you are considering refinancing, learn about debt to income ratio and the Student Loan Refinancing Ladder. But again, without fully knowing your situation it may be best to book a consult with the team.