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What is the difference between the Federal Direct Loan Program (DL) and the Federal Family Education Loan Program (FFELP)?

April 26, 2017difference DL Education family Federal FFELP loan program

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What is the difference between the Federal Direct Loan Program (DL) and the Federal Family Education Loan Program (FFELP)?

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The DL was originally enacted in 1990 by President George H.W. Bush as a demonstration program to simplify the federal student loan delivery system. In the DL Program, the federal government lends money to students with capital raised wholesale from the private sector through the auction of treasury securities. In the Federal Family Education Loan Program (FFELP), private lenders make federally-guaranteed student loans to parents and students. Lenders who offer loans to students under FFELP receive subsidies from the federal government. The government also guarantees a large portion of the loan, insuring private lenders against default. According to the Congressional Budget Office, if the DL Program replaced the FFEL Program, the government would save over $70 billion over the next 10 years. For details on the differences between the two programs, visit our DL-FFELP Comparison Chart.