The Federal Federal Family Education Loans ( FFEL ) is the second largest US higher education loan program (Direct Loans became the first). FFEL was initiated by the Higher Education Act of 1965 and funded through public/private partnerships managed at the state and local levels. In 2007-08, FFEL served 6.5 million students and parents, lending a total of $ 54.7 billion in new loans (or 80% of all new federal student loans). Since 1965, 60 million Americans have used FFEL loans to pay for tuition fees.
Following the passage of the Health Care and Education Reconciliation Act of 2010 on 5 January 2010, the program was discontinued, and no subsequent loans were allowed under the program after 30 June 2010.
Video Federal Family Education Loan Program
Ikhtisar FFEL dan DL
In the FFEL Program, private lenders make student loans secured on a federal basis to parents and students. Commercial lenders (eg Sallie Mae) will use their personal capital to finance loans under FFELP but receive subsidies from the federal government. This subsidy is used to keep interest rates at the federal mandate level, pay the costs associated with borrowing and cover costs associated with collection and default. The government also guarantees most loans, insuring private lenders against default. If the default is a parent or student, the private lender is reimbursed by the government for its loss. In contrast, under the Direct Loan program, the government provides direct loans to students using federal funds provided by the US Treasury.
Maps Federal Family Education Loan Program
Stafford and PLUS Loans
Both federal student loan programs offer Federal Stafford Loan and Federal PLUS Loan for graduate students and for dependent undergraduate student parents.
The main federal student loan is Stafford Loans. There are two types of Stafford loans:
- Subsidized. For students who meet the financial needs test, the government pays all interest costs on behalf of the borrower while they are at school, and during grace period and the postponement period. Payments begin six months after graduation or students withdraw to less than half the time.
- Not subsidized. Students who do not meet financial needs tests or who need to supplement their subsidized loans can receive unsubsidized Stafford loans. The borrower may defer payment of interest during the school period, grace, and suspension, but they are responsible for all interest arising. Payments begin six months after graduation or students withdraw to less than half the time.
Interest rate
Interest rates are set by law, as follows:
- For most Stafford loans made before July 1, 2006: Variable rates apply (change annually by 8.25% limit).
- Stafford Loans made from 1 July 2006: 6.8%.
- A new subsidized Stafford loan for undergraduate students from 1 July 2008 (per recent budget reconciliation law):
- 6.0% for first loan disbursed between 1 July 2008 and 30 June 2009
- 5.6% for loans first disbursed between 1 July 2009 and 30 June 2010
- 4.5% for loans first disbursed between 1 July 2010 and 30 June 2011
- 3.4% for the first loan disbursed between 1 July 2011 and 30 June 2012
- The interest rate under the new law does not extend to the loan disbursed after June 30, 2012. This new loan rate will return to 6.8%. The law does not affect Stafford's new unsubsidized loan. The rate remains 6.8%
- PLUS loans made from 1 July 2006: 8.5% in the FFEL Program; 7.9% in the DL Program. For PLUS loans made before July 1, variable rates apply (with a cap of 9.00%).
- The House of Representatives adopts a resolution in May 2013 to link the interest rate on student loans to the free market credit interest rate. Each year, the student lending rate will adjust to the market fitting. subsidized and unsubsidized rates will close at 8.5%.
President Obama and FFEL
On April 24, 2009, President Barack Obama called for an end to the FFEL program, calling it a wasteful and inefficient system of taxpayers... paying a premium to banks to act as intermediaries - premiums that cost Americans billions of dollars annually.... we can afford to pay. "
A review of the Congressional Budget Office in July 2009 showed that if the government made direct borrowing on its own, instead of using private sector lenders through FFEL, it would save $ 80 billion over ten years. The estimate was later lowered to $ 61 billion after the Congressional Budget Office revised its estimate for 2010.
Industry response
The American Student Loans Provider, an industry lobbying group representing private lenders, issued a statement prepared on April 6, 2009 stating "growing consensus" among legislators "that large-scale changes in the delivery system of financial aid should be carefully considered. "
Student Loan Obligation Act
Student Loan Liability Law is proposed, if enacted will limit the interest rate of student loans to 3.4%. The version of this bill, HR1330, sponsored by Rep. Karen Bass (D-CA37) on May 21, 2013.
Proposals from Sen. Elizabeth Warren, a Democrat from Massachusetts, will use the Federal Reserve's discount window for student loans while Congress seeks a more permanent solution. In December 2013, this proposal has been postponed until the Obama administration can negotiate a compromise with the Senate on reform of financial aid.
References
Source of the article : Wikipedia
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