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What are the primary differences between Direct Loans and the Federal Family Education Loan Program (FFELP)?

April 26, 2017differences Education family Federal FFELP loan Loans primary program

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What are the primary differences between Direct Loans and the Federal Family Education Loan Program (FFELP)?

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A. The primary difference is the source of the loan funding. Direct Loans come straight from the U. S. Department of Education using funds obtained from the U.S. Treasury. This program offers students one single source of contact since these federal loans are made, guaranteed and serviced by the U.S. Department of Education. In the FFEL Program the lender, guarantor and servicer can involve any combination of banks and agencies across the country. It is often the case that the student’s lender will sell their loan to another lender or loan servicer. This can add complexity for students, especially in the event an error or problem in the processing of their loans should occur. Under Direct Loans, there is a single point of contact for students and their school to turn to with any problems that might arise.