FFELP Guide

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					FFELP Guide

Seven Major Players in FFELP
       Federal government. Borrower. School. Lender. Guarantor. Servicer. Secondary market.
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FFELP Players
 Federal Government.
    U.S. Citizens and Residents. Taxpayers. Congress. U.S. Department of Education.

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FFELP Players
 Federal Government.
 U.S. Citizens and Residents.
 Beneficiaries.

 Taxpayers.
 Source of funds.

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FFELP Players
 Borrower.
 Student/parent who borrows money for post-secondary education.
 Must apply for the loan.  Understand terms.  Sign promissory note.  Repay the loan.

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FFELP Players
 Educational institutions.
       Determine borrower’s eligiblity. Award federal aid. Process application files. Certify loan applications. Process loan proceeds. Monitors borrower’s enrollment status. Reconcile student accounts.
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FFELP Players
 Lender.
     Must comply with ED’s lending regulations. Sets institutional policy. Provides capital. Provides loan servicing or work with a servicer. Interaction with guarantors.

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FFELP Players
 Guarantor.
 Provides guarantee for lender.  Maintains reserve fund to pay lender claims.  Monitors compliance with federal regulations and guarantor policies.  Provides administrative support services.
    Issues Notice of Loan Guarantee and Disclosure Statement. Provides reports. Processes default claims. Pursues collection of defaults. 4

FFELP Players
 Servicer.
 Manages loans on behalf of the owner.
  Lender remains owner of loan. Lender remains responsible for loan.

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FFELP Players
 Secondary Market.
 Buys loans from lenders.  Frees-up funds for new loans.  All responsibility for the loan is transferred to the secondary market.

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FFEL Program Parameters
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Federal Loan Program Parameters
 Federal Stafford Loan Program.
 Definition and eligibility formulas.
  Subsidized Federal Stafford Loans. Unsubsidized Federal Stafford Loans.

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Federal Loan Program Parameters
 Subsidized Federal Stafford Loan.
 Eligibility based on financial need.  Schools may reduce eligibility.  Schools may decline to certify a loan for less than $200.  Review chart for loan limits.

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Federal Loan Program Parameters
 Unsubsidized Federal Stafford Loan.
 Eligibility not based on financial need.  Interest rate same as subsidized Stafford.  May receive subsidized and unsubsidized loans for the same loan period.

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Federal Loan Program Parameters
 Student eligibility.
 List of requirements on page 8.

 Fixed interest rate of 6.8% as of July 1, 2006.

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Federal Loan Program Parameters
 Stafford-loan guarantee and origination fees.
 Guarantee fee is paid by the lender to the guarantor.  Origination fee is paid to ED by the lender.

 Grace period for federal Stafford loans.  Stafford-loan repayment terms.
    Standard. Graduated. Income-sensitive. Extended.

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Federal Loan Program Parameters
 Borrowing limits.

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Federal Loan Program Parameters
 Aggregate loan limits.

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Federal Loan Program Parameters
 Federal PLUS for parents.
 Available for parents without adverse credit.  EFC is not considered in determining PLUS loan eligibility.  Parent must be natural or adoptive parent of the student.
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Federal Loan Program Parameters
 Graduate-student eligibility.
 Beginning July 1, 2006, graduate and professional students who qualify for federal financial aid and have no adverse credit will be eligible to borrow through the PLUS-loan program.

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Federal Loan Program Parameters
 Federal PLUS.
 Loan Limits.
    Annual = COA - Other Aid Begins day loan is disbursed. PLUS rates page 18-19. Begins day after the last disbursement.

 Interest Rate.

 Repayment.

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Federal Loan Program Parameters
 Loan Proration.
 Student is enrolled in a program less than one academic year.  Student is enrolled in a program equal to or longer than the statutory minimum for an academic year, but completing a period shorter than a year.

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Federal Loan Program Parameters
 Loan Proration.
 Proration Method 1.  Proration Method 2.

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Federal Stafford-loan Certification Case Study
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Federal Loan Program Parameters
 Life of a Stafford loan.  Life of a PLUS loan.

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Test Your Knowledge with these case studies!
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FFELP Guide

Thank you! 


				
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