FFELP Guide

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FFELP Guide
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Seven Major Players in FFELP

• Federal government.
• Borrower.
• School.
• Lender.
• Guarantor.
• Servicer.
• Secondary market.

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FFELP Players

• Federal Government.
• U.S. Citizens and Residents.
• Taxpayers.
• Congress.
• U.S. Department of Education.

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FFELP Players

• Federal Government.
• U.S. Citizens and Residents.
• Beneficiaries.
• Taxpayers.
• Source of funds.

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FFELP Players

• Borrower.
• Student/parent who borrows money for
  post-secondary education.
• Must apply for the loan.
• Understand terms.
• Sign promissory note.
• Repay the loan.

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FFELP Players

• Educational institutions.
• Determine borrowers eligiblity.
• Award federal aid.
• Process application files.
• Certify loan applications.
• Process loan proceeds.
• Monitors borrowers enrollment status.
• Reconcile student accounts.

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FFELP Players

• Lender.
• Must comply with EDs lending regulations.
• Sets institutional policy.
• Provides capital.
• Provides loan servicing or work with a servicer.
• Interaction with guarantors.

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FFELP Players

• Guarantor.
• Provides guarantee for lender.
• Maintains reserve fund to pay lender claims.
• Monitors compliance with federal regulations and
  guarantor policies.
• Provides administrative support services.
• Issues Notice of Loan Guarantee and Disclosure
  Statement.
• Provides reports.
• Processes default claims.
• Pursues collection of defaults.

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FFELP Players

• Servicer.
• Manages loans on behalf of the owner.
• Lender remains owner of loan.
• Lender remains responsible for loan.

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FFELP Players

• Secondary Market.
• Buys loans from lenders.
• Frees-up funds for new loans.
• All responsibility for the loan is transferred to
  the secondary market.

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FFEL Program Parameters
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Federal Loan Program Parameters

• Federal Stafford Loan Program.
• Definition and eligibility formulas.
• Subsidized Federal Stafford Loans.
• Unsubsidized Federal Stafford Loans.

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Federal Loan Program Parameters

• Subsidized Federal Stafford Loan.
• Eligibility based on financial need.
• Schools may reduce eligibility.
• Schools may decline to certify a loan for less
  than 200.
• Review chart for loan limits.

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Federal Loan Program Parameters

• Unsubsidized Federal Stafford Loan.
• Eligibility not based on financial need.
• Interest rate same as subsidized Stafford.
• May receive subsidized and unsubsidized loans for
  the same loan period.

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Federal Loan Program Parameters

• Student eligibility.
• List of requirements on page 8.
• Fixed interest rate of 6.8 as of July 1, 2006.

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Federal Loan Program Parameters

• Stafford-loan guarantee and origination fees.
• Guarantee fee is paid by the lender to the
  guarantor.
• Origination fee is paid to ED by the lender.
• Grace period for federal Stafford loans.
• Stafford-loan repayment terms.
• Standard.
• Graduated.
• Income-sensitive.
• Extended.

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Federal Loan Program Parameters

• Borrowing limits.

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Federal Loan Program Parameters

• Aggregate loan limits.

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Federal Loan Program Parameters

• Federal PLUS for parents.
• Available for parents without adverse credit.
• EFC is not considered in determining PLUS loan
  eligibility.
• Parent must be natural or
  adoptive parent of the student.

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Federal Loan Program Parameters

• Graduate-student eligibility.
• Beginning July 1, 2006, graduate and professional
  students who qualify for federal financial aid
  and have no adverse credit will be eligible to
  borrow through the PLUS-loan program.

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Federal Loan Program Parameters

• Federal PLUS.
• Loan Limits.
• Annual COA - Other Aid
• Interest Rate.
• Begins day loan is disbursed.
• PLUS rates page 18-19.
• Repayment.
• Begins day after the last disbursement.

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Federal Loan Program Parameters

• Loan Proration.
• Student is enrolled in a program less than one
  academic year.
• Student is enrolled in a program equal to or
  longer than the statutory minimum for an academic
  year, but completing a period shorter than a year.

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Federal Loan Program Parameters

• Loan Proration.
• Proration Method 1.
• Proration Method 2.

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Federal Stafford-loan Certification Case Study
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Federal Loan Program Parameters

• Life of a Stafford loan.
• Life of a PLUS loan.

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Test Your Knowledgewith these case studies!
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FFELP Guide
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