How to get FFEL loan forgiveness
The Federal Family Education Loan Program (FFELP) was one of the first student loan programs in the country, but it ended on July 1, 2010. For this reason, you might run into problems if you have a FFELP loan and you are considering studying loan remission. Here is how you can get a student loan cancellation if you have FFELP loans.
What are FFEL loans?
FFELP was a loan program that allowed private lenders to disburse federal student loans. This is different from the William D. Ford Federal Direct Loan (Direct Loan) program, where the US Department of Education issues student loans directly to borrowers and has contracts with third parties. loan officers to collect federal student loans.
Even though the program no longer exists, FFEL borrowers continue to repay their loans.
Are FFEL loans eligible for loan forgiveness?
FFELP was discontinued in 2010, but there are still borrowers who are repaying FFEL loans. If you’re looking for ways to get student loan forgiveness, your FFEL loans will hold you back.
This is because FFEL loans are not eligible for forgiveness – only direct loans do. If you want to be entitled to forgiveness, you can consolidate your FFEL loans into a direct consolidation loan. This moves your loans into the direct loan program, giving you all the benefits and guarantees of direct loans. From there you can sign up for a income based repayment plan or Public Service Loan Forgiveness (PSLF), who forgive you both for your loan balance after a set repayment period.
While consolidating your loans will put you on the path to forgiveness, keep in mind that you are starting from scratch. The PSLF requires 120 qualifying monthly payments, which means you will be making payments for around 10 years before being eligible for pardon, while income-based repayment plans can extend that time to 20 or 25 years.
Are FFEL loans eligible for coronavirus relief?
For the past year, millions of student loan borrowers have taken advantage of suspended payments, lower interest rates and collections on federal student loans. But FFELP borrowers were left behind, leaving them to continue making payments even if they lost their jobs or couldn’t work through no fault of their own.
However, on March 30, 2021, the Ministry of Education extended COVID-19 relief measures to FFEL loans in default. While FFEL loans in good standing are still not eligible, borrowers whose loans are in arrears may receive a refund of any foreclosed wages or voluntary payments made since March 13, 2020.
The bottom line
If you have FFELP loans and are looking for student loan forgiveness, you will need to consolidate your loans through a direct consolidation loan. However, think carefully about the decision. Consolidating your loans to qualify for a forgiveness program will reset your repayment period, so if you’ve been making payments for 10 or 20 years already, the potential for forgiveness may not be worth it.
For help with repaying a student loan, you can instead consider refinance your loans to pay them off sooner, get a lower interest rate or both. You will lose access to income-oriented repayment plans and federal forbearance options, but you may be able to pay off your loans with less additional cost.