If you’re looking for a way to get money for school, you may have come across FFELP loans. But what are they? How do they work? And how can you get one? This blog post will answer all of your questions about FFELP loans and help you decide if one is right for you.
What is an FFELP loan?
So, what is an FFELP loan? FFELP stands for Federal Family Education Loan Program. It’s a federal program that provides loans to students attending eligible colleges or universities. The loans are made by private lenders, but they’re guaranteed by the federal government. That means if you can’t repay your loan, the government will pay it back for you.
There are two types of FFELP loans: subsidized and unsubsidized. With a subsidized loan, the government pays the interest while you’re in school and during your grace period. An unsubsidized loan accrues interest from the time it’s disbursed, but you don’t have to make payments until after you graduate or leave school.
The interest rate on an FFELP loan is variable, which means it can change over time. The current interest rate for subsidized and unsubsidized loans is 2.83%.
How to apply for an FFELP loan?
To apply for an FFELP loan, you’ll need to fill out the Free Application for Federal Student Aid (FAFSA). This form will determine how much money you’re eligible to receive in financial aid. Once you’ve received your FAFSA results, you’ll need to contact the financial aid office at your school to apply for an FFELP loan.
If you’re approved for an FFELP loan, you’ll need to sign a promissory note. This is a legal document that states you agree to repay your loan. You’ll also need to complete entrance counseling, which is a session that provides information about your rights and responsibilities as a borrower.
Once you’ve signed your promissory note and completed entrance counseling, your FFELP loan will be disbursed to your school. The school will then apply the money to your tuition and fees. If there’s any money left over, it will be given to you in the form of a refund.
If you have any questions about FFELP loans, be sure to contact the financial aid office at your school. They’ll be able to help you determine if an FFELP loan is right for you and walk you through the application process.
Benefits of FFELP loans
There are several benefits of FFELP loans. One benefit is that you can choose your repayment plan. There are six repayment plans to choose from, and you can change your plan at any time. You can also consolidate your FFELP loans, which can lower your monthly payment and save you money on interest.
Another benefit of FFELP loans is that there are deferment and forbearance options available. Deferment allows you to temporarily postpone your payments if you’re experiencing financial hardship. Forbearance allows you to temporarily lower your payments or extend the repayment period.
If you’re having trouble making your payments, you should contact your loan servicer. They may be able to help you lower your payments or put you on a repayment plan that’s more manageable for you.
Drawbacks of FFELP loans
There are also some drawbacks of FFELP loans. One drawback is that the interest rate is variable, which means it can increase over time. Another drawback is that there’s an origination fee, which is a fee charged by the lender when you first take out the loan.
FAQs
What if I have a bad credit score
If you have bad credit, you may not be able to get an FFELP loan. And if you do get an FFELP loan, you may have to pay a higher interest rate.
Will FFELP loans be forgiven?
No, FFELP loans are not forgiven. However, you may be able to get your FFELP loan discharged if you meet certain criteria.
Can I get an FFELP loan if I’m not a US citizen?
No, you must be a US citizen or permanent resident to get an FFELP loan.
What if I can’t find a lender?
If you can’t find a lender, you can contact the Department of Education. They may be able to help you find a lender or direct you to other financial aid options.
Is an FFELP loan a federal loan?
Yes, an FFELP loan is a federal student loan. However, the lender is a private company. The Department of Education guarantees the loan, but the lender is responsible for disbursing and collecting the loan.
Are FFELP loans covered under Navient settlement?
No, FFELP loans are not covered under the Navient settlement. The Navient settlement only applies to FFELP loans that were serviced by Navient. If your FFELP loan was serviced by another company, it’s not covered under the settlement.
Conclusion
FFELP loans can be a great way to finance your education. They offer several repayment options and deferment or forbearance if you’re experiencing financial hardship. If you have questions about FFELP loans, be sure to contact the financial aid office at your school. They’ll be able to help you determine if an FFELP loan is right for you and walk you through the application process.
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