Students who fill out their FAFSA and qualify for Federal Loan Programs such as subsidized and unsubsidized Stafford Loans and PLUS Loans, can have their loans processed through two federal programs: the Direct Loan Program (DLP) or the Federal Family Education Loan Program (FFELP). The difference between the two programs is “the who” behind who funds the loans.
With the Direct Loan Program, the loans are funded through the U.S. Department of Education in conjunction with a university and with the Federal Family Education Loan Program the loans are funded by private lenders that participate in the FFELP program. Most schools offer either/or but there are some schools out there that offer both programs.
According to NextStudent, the Phoenix-based premier education funding company, students and parents should keep in mind that it is their decision when it comes to choosing “the who” behind who funds their FFELP loans. A university’s financial aid office can and will recommend a private lender for students to work with— however, it is just that, a recommendation. The Higher Education Act mandates that schools can not require students to get loans through the preferred lenders suggested by their college’s financial aid office.
Choosing the Best Lender
The interest rates on FFELP loans are mandated by the Department of Education, so all lenders that participate in this program must charge the same rates, the federal rate. However, there are other ways that lenders vie for business. Many offer special benefits, such as discounts for electronic payments and rate reductions for on-time payment history. When choosing a lender it’s important to take a look at these benefits carefully, and choose the lender that can save you the most over the long run.
Lenders also compete for your business by offering different types of repayment schedules. Look for a lender that offers flexible repayment options, such as reduced payment or postponed repayment, while your child is in school. Hardship policies are also an important factor because certain lenders will, under certain hardship circumstances, lower your monthly payment or postpone repayment until you’re back on your feet.
Lastly, look for a lender that offers the best support, service and convenience, such as online applications, a toll-free contact number, and a professional, courteous staff that will help you through the loan process and over the life of your loan.
NextStudent’s FFELP Loan Incentives
NextStudent offers parents and students some of the most competitive loan incentives for FFELP loans. First and foremost, NextStudent is committed to excellent customer service. Every NextStudent customer is assigned their own Education Finance Advisor, one person to help the customer throughout the entire loan process. Also, there are no collateral or credit checks when applying for a NextStudent FFELP loan.
The NextStudent Premier Stafford loan package includes:
* 2 percent upfront cash rebate
* 3 percent cash rebate on the remaining principal balance after the first 30 months of consecutive on-time payments
* .375 percent interest rate reduction when the borrower elects to use auto-debit for repayment
The NextStudent PLUS and Graduate PLUS loan package includes:
* 3 percent cash rebate on the remaining principal balance after the first 12 months of consecutive on-time payments
* 2 percent interest rate reduction after the first 48 months of consecutive on-time payments
* .25 percent interest rate reduction when the borrower elects to use auto-debit for repayment
Before they sign on the dotted line, students and parents should make sure that the lender they chose to fund their FFELP loans is one that works for them.
NextStudent believes that getting an education is the best investment you can make, and it is dedicated to helping you pursue your education dreams by making college funding simple. Learn more about student loans.
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