What are the differences between the Direct Loan Program and the Federal Family Education Loan Program (FFELP)?
The most important difference between Direct Lending and the FFEL program is the source of loan funding. Direct Loans are funded through the U.S. Department of Education using funds obtained from the U.S. Treasury. This program offers students one point of contact because the loans are made, backed, and serviced by the U.S. Department of Education. In the FFEL program, funds come from banks and other lending institutions creating multiple points of contact for students. There are also some differences in interest rates, fees and repayment options between the Direct Loan Program and FFELP; these are explained below.
