Federal Family Education Loans (FFEL)

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Even though FFEL and Direct Loans are now both through the Direct Loan Programs, there are restrictions on the type of repayment plan that will be accepted by each type of loan. In this article, we'll discuss those restrictions and how they can affect you.

What are my FFEL Loan repayment options?

Direct Loans

Direct Loans allow borrowers to change repayment plans at any time during their repayment. The ONLY plans that borrowers can choose from are:

  • Standard repayment - Allows you to pay off your student loan debt in 10 years or less with a minimum monthly payment of $50. Your monthly payment will be a fixed amount based on your principle and interest.
  • Extended repayment - You must have at least $30,000 in federal student loan debt with a single lender to qualify for this repayment plan. If you qualify, this plan allows you to pay off your student loan debt in 25 years or less with a minimum monthly payment of $50. You have a choice of a fixed or graduated payment in this plan. You may also choose this option with consolidation and your payment period would change to 10-30 years.
  • Graduated repayment - Allows you to pay off your student loan debt in 10-30 years depending on the amount you owe. You will have a minimum monthly payment of $25 that will increase over time until your loan is paid completely. Your monthly payment will be determined by your debt amount.
  • Income-based repayment - You must have partial financial hardship to select this repayment plan. If you qualify, this plan allows you to pay off your student loan debt in 25 years or less. Your monthly payment is capped at 15% of your discretionary income. These monthly payments may change due to income changes.
    • Discretionary income = Adjusted Gross Income - 150% of the poverty line
  • Income-contingent repayment - You have up to 25 years to pay off your loan with monthly payments that fluctuate depending on your income. Your payments are actually calculated annually based on your adjusted gross income, family size, and total amount of your Direct Loans. If you do not finish repaying your loan after making 25 years of monthly payments (300 on-time payments of at least the minimum required) the remaining portion will be forgiven. The amount that is forgiven, however, you may have to pay an income tax on.

FFEL Loans

FFEL Loans are required to allow borrowers to change repayment plans a minimum of one time per year. Some will permit changes more frequently but not all. The ONLY plans that borrowers can choose from are:

  • Standard repayment
  • Extended repayment
  • Graduated repayment
  • Income-based repayment
  • Income-sensitive repayment - You have up to 10 years to pay off your loan with monthly payments based on your annual income. These monthly payments change as your income level changes. This repayment plan is unique in that the formula used to calculate your monthly payment may vary depending on your lender.