Federal Education – What Is The Federal Family Education Loan Plan
Federal Education – What Is The Federal Family Education Loan Plan
If you are a student and you are having any problems with your loans, you might be interested in learning about the FFELP or the Federal Education Loan Plan. This is a Federal education loan partnership that came into existence in 1965 through an Act of Congress, combining three main Federal lenders: Stafford loans, Perkins loans and PLUS (Parent Loans for Undergraduate Students) loans. This partnership has since then disbursed billions in loans. It is good to note here that PLUS Federal education loan covers graduate and professional students as well since 2006 (July 1st)
How is this Federal education loan functioning?
This type of Federal education loan is prospering and functioning through a wide national network that includes a varied number of financial institutions such as banks, credit unions and wide variety of independent financial institutions who are ready to lend money because they are guaranteed the repayment by the Federal Government. In this way the burden of repayment is not only on the guarantors, but is shared in part with the Federal Government.
There are two types of loans available through this Federal education loan partnership: (1) subsidized and unsubsidized. The subsidized Federal education loan would have the Government take care of the interest of the loan for the whole time the student is in college, plus six months after graduation; the unsubsidized loan would have the student pay for the interest, even if there is a clause whereby the collection interest can be postponed for a re-determined period of time.
How do you apply and get this Federal education loan?
The process is simplified so it could reach and benefit a vast majority of students all over the country. All you have to do is to fill in a Free Application for Student Aid (FAFSA) through your college. Your college would scrutinize the application and fill in the details of the Expected Financial Contribution (EFC) based on your the financial situation (if you are an adult) or your parents if you are still a minor. In this way the Federal education loan would take care of the money that falls short and enable you to complete your education.
This type of Federal education loan would be disbursed in two major installments: (1) one goes directly to the college, and (2) the other goes to you (the student) or your parents. There is often a fee of 4-8 per cent charged for this service by the private lender, so be sure you include this when you make an estimate of the cost of the course (for loan purpose).