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Whatis the difference between the Direct Loan Program and the Federal Family Education Loan Program (FFELP)?

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

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Whatis the difference between the Direct Loan Program and the Federal Family Education Loan Program (FFELP)?

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The most important difference between Direct Lending and the FFELP 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 and parents 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 lenders creating multiple points of contact for students. There are also some differences in interest rate, fees and repayment options which make the Direct Loan Program more beneficial for borrowers.