There are two types of federal student loan programs: Direct Loans and FFELP Loans.

William D. Ford Federal Direct Loan Program Loans (Direct Loans): As of July 1, 2010, all federal student loans are funded by the federal government through the Federal Direct Loan Program. Loan types include Direct Stafford, Direct Parent PLUS, Direct Graduate Student PLUS (GradPLUS) loans, and Direct Consolidation loans. These student loans have low interest rates and flexible repayment terms. There are a limited number of organizations designated by the U.S. Department of Education to service these loans. If you have Direct Loans, your billing statement will reference “Direct” and/or “Edfinancial.com/DL”.

Federal Family Education Loan Program Loans (FFELP Loans): FFELP loans were available through private lenders prior to July 1, 2010 (you may have chosen a private lender from a list when you originated your loan) and were guaranteed by the federal government.  FFELP loan types include Stafford, Parent PLUS, GradPLUS, and Consolidation loans. FFELP loans have similar terms and conditions to Direct Loans, but there are some differences in repayment plans, loan forgiveness programs, borrower benefits, and interest rates.

Private student loans: Not guaranteed by the federal government, private loans are similar to bank loans, and their interest rates may be based on an index, such as Prime or LIBOR. The interest rate for private loans will depend on the borrower’s, and sometimes the co-borrower’s, credit history. Private loans are intended to close the gap between the amount students can borrow under the federal student loan programs and the cost of higher education.

If you’re still not sure of your loan program, please contact us for assistance.