FFELP Guide. Federal government. Borrower. School. Lender. Guarantor. Servicer. Secondary...
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Transcript of FFELP Guide. Federal government. Borrower. School. Lender. Guarantor. Servicer. Secondary...
FFELP Guide
Federal government. Borrower. School. Lender. Guarantor. Servicer. Secondary market.
Seven Major Players in FFELP
2
Federal Government. U.S. Citizens and Residents. Taxpayers. Congress. U.S. Department of Education.
FFELP Players
2
Federal Government. U.S. Citizens and Residents.
Beneficiaries. Taxpayers.
Source of funds.
FFELP Players
2
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.
3
Educational institutions. Determine borrower’s eligiblity. Award federal aid. Process application files. Certify loan applications. Process loan proceeds. Monitors borrower’s enrollment status. Reconcile student accounts.
FFELP Players
3
Lender. Must comply with ED’s lending regulations. Sets institutional policy. Provides capital. Provides loan servicing or work with a servicer. Interaction with guarantors.
FFELP Players
3
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.
FFELP Players
4
Servicer. Manages loans on behalf of the
owner. Lender remains owner of loan. Lender remains responsible for
loan.
FFELP Players
5
Secondary Market. Buys loans from lenders. Frees-up funds for new loans. All responsibility for the loan is transferred to
the secondary market.
FFELP Players
5
FFEL Program
Parameters6
Federal Loan Program Parameters Federal Stafford Loan Program.
Definition and eligibility formulas. Subsidized Federal Stafford Loans. Unsubsidized Federal Stafford Loans.
6
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.
6
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.
7
Federal Loan Program Parameters Student eligibility.
List of requirements on page 8. Fixed interest rate of 6.8% as of July
1, 2006.
8-9
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.
11-12
Federal Loan Program Parameters Borrowing limits.
13
Federal Loan Program Parameters Aggregate loan limits.
14
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. 16
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.
16
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.
17-19
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.
20
Federal Loan Program Parameters Loan Proration.
Proration Method 1. Proration Method 2.
22-23
Federal Stafford-loan Certification Case
Study24
Federal Loan Program Parameters Life of a Stafford loan.
Life of a PLUS loan.
26-27
Test Your Knowledgewith these case
studies!
29-30
FFELP Guide
Thank you!