• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

The College Investor

Student Loans, Investing, Building Wealth

  • About
  • Podcasts
  • Research
  • Contact
  • Save For College
      • How To Start

      • How To Save For College
      • How To Pay For College
      • What Is the Average Cost of College?
      • What Is A 529 Plan and Where to Open One in Your State
      • How Much Should You Have In A 529 Plan By Age
      • How To Use A 529 Plan For Private Elementary And High School
      • What Are Qualified Expenses For A 529 Plan (And What Doesn’t Count)?
      • The Best Brokers To Open A 529 Plan
      • Tools + Accounts

      • 529 Plans: The Ultimate College Savings Plan
      • 529 Plan Contribution Limits
      • Prepaid Tuition Plans | What To Know
      • Understanding And Using 529A ABLE Accounts
      • Using A Roth IRA To Save And Pay For College
      • FAFSA Deadlines for Financial Aid
      • CollegeBacker Review
      • Upromise Review
      • UNest Review
      • Other Options

      • Student Loan And Financial Aid Programs By State
      • The Guide To Military And VA Education Benefits
      • How To Fill Out The FAFSA
      • How To Find College Scholarships
      • The Best College Scholarship Search Websites
      • How To Find Grants To Pay For College
      • Pell Grants: What They Are And How To Qualify
      • Understanding Federal Work-Study
      • How To Use A 529 Plan If Your Child Doesn’t Go To College
  • Student Loans
      • Borrowing

        • How Student Loans Work
        • How To Apply For A Student Loan
        • Best Student Loans And Rates In March 2023
        • 10 Best Private Student Loans Of March 2023
        • Best Student Loans To Pay For Graduate School
        • Best Student Loans To Pay For Medical School
        • Parent Loans To Pay For College
        • No-Cosigner Student Loan Options
        • Guide To Income Sharing Agreements (ISAs)
        • Best International Student Loans
      • Get Out Of Debt

        • Best Student Loan Refinance Companies In March 2023
        • Best Student Loan Repayment Plans
        • Best Student Loan Refinancing Bonuses And Promotional Offers Of March 2023
        • Student Loan Forgiveness Programs (The Complete List)
        • The Full List Of Student Loan Forgiveness Programs By State
        • Public Service Loan Forgiveness (PSLF)
        • Top Student Loan Scams
        • Average Student Loan Monthly Payment
        • Average Student Loan Debt By Year
      • Reviews

        • Credible Review
        • Splash Review
        • Ascent Review
        • Citizens Bank Review
        • Commonbond Review
        • Earnest Review
        • ELFI Review
        • Laurel Road Review
        • LendKey Review
        • SoFi Review
  • Investing
      • How To Start

        • How To Start Investing in High School
        • How To Start Investing In College
        • How To Start Investing In Your Twenties For 22 – 29 Year Olds
        • How To Start Investing In Your 30s For 30 – 39 Year Olds
        • How To Start Investing With $100 Or Less
        • How To Give Kids The Gift Of Stock
        • What Is Dividend Growth Investing
        • IRA Rollover Chart
      • Tools + Accounts

        • Best Online Stock Brokers
        • The Best Traditional And Roth IRA Accounts
        • The Best Robo-Advisors
        • The Best Investing Apps
        • The Best Places to Trade Options
        • The Best Places To Open A Health Savings Account
        • The Best Solo 401k Providers
        • The Best Self-Directed IRA Providers Of 2023
        • Best Cryptocurrency Exchanges
      • Reviews

        • Vanguard Review
        • Fidelity Review 2023
        • M1 Finance Review
        • TD Ameritrade Review 2023
        • Charles Schwab Review
        • Robinhood Review
        • Webull Review
        • Betterment Review 2023
        • Wealthfront Review
  • Earn More Money
      • Extra Income

        • 20 Best Side Hustles You Can Start Earning With In 2023
        • 54 Side Hustle Ideas To Make Money Fast In 2023
        • 100 Ways To Make Money In College In 2023
        • 80 Ways To Make Money From Home In 2023
        • 5 Quick Money Making Ideas (That Take Less Than 1 Hour)
        • 10 Interesting Ways You Can Make Money Driving
        • High-Paying Side Gigs That Earn $1,000 or More Per Month
        • The 10 Best Money-Making Apps
        • Paid Surveys: Earn Money For Giving Your Opinion Online
        • 10 Crazy Ways To Make $10,000 You’ve Never Heard Of
      • Build Wealth

        • 40 Best Passive Income Ideas To Build Wealth In 2023
        • 3 Ways To Make $50,000 Per Year Without Working With Passive Income
        • How To Become A Real Estate Investor With Just $500
        • 15 Best Online Business Ideas
        • Residual Income: 7 Super Smart Ways to Build It
        • The Most Common Multiple Income Streams
        • How To Become A Real Estate Mogul With Only $10,000
      • Reviews

        • Fundrise Review
        • RealtyMogul Review
        • FarmTogether Review
        • AcreTrader Review
        • Swagbucks Review
        • Survey Junkie Review
        • TopCashback Review
        • DoorDash Review
  • Personal Finance
      • Banking

        • 10 Best High Yield Savings Accounts Of March 2023
        • 10 Best Money Market Accounts Of March 2023
        • 10 Best Free Checking Accounts In March 2023
        • Best Bank CD Rates Of March 2023
        • 10 Best Business Checking Accounts In March 2023
        • Best Online Banks Of March 2023
        • Best Credit Unions Nationwide Of March 2023
        • Best College Student Checking Accounts Of March 2023
      • Insurance

        • Best Life Insurance Companies
        • Renters Insurance
        • Car Insurance
        • Pet Insurance
        • Umbrella Insurance
        • Disability Insurance
        • Tuition Insurance
        • Travel Insurance
      • Credit Tools

        • Best Budgeting Apps
        • Cash Advance Apps
        • How To Get A Free Credit Score Report
        • Best Credit Monitoring Services For 2023
        • Debt Settlement: Inside The Secret World
        • Credit Repair Explained: Should You Pay For Help?
        • Best Personal Loan Companies And Lenders
        • Online Loan Companies To Borrow From Home
      • Tax

        • Best Tax Software
        • Free Tax Software
        • IRS Tax Refund Calendar
        • Common IRS Questions and Errors
        • Federal Tax Brackets
        • Capital Gains Tax Brackets
        • 401k Contribution Limits
        • IRA Contribution Limits
        • HSA Contribution Limits
  • Awards
  • Search
Home » Student Loans » Federal » What Should You Do With Your Old FFELP Loans?

What Should You Do With Your Old FFELP Loans?

Updated: November 22, 2022 By Mark Kantrowitz

At The College Investor, we want to help you navigate your finances. To do this, many or all of the products featured here may be from our partners. This doesn’t influence our evaluations or reviews. Our opinions are our own. Any investing information provided on this page is for educational purposes only. The College Investor does not offer investment advisor or brokerage services, nor does it recommend buying or selling particular stocks, securities, or other investments. Learn more here.Advertiser Disclosure

There are thousands of financial products and services out there, and we believe in helping you understand which is best for you, how it works, and will it actually help you achieve your financial goals. We're proud of our content and guidance, and the information we provide is objective, independent, and free.

But we do have to make money to pay our team and keep this website running! Our partners compensate us. TheCollegeInvestor.com has an advertising relationship with some or all of the offers included on this page, which may impact how, where, and in what order products and services may appear. The College Investor does not include all companies or offers available in the marketplace. And our partners can never pay us to guarantee favorable reviews (or even pay for a review of their product to begin with).

For more information and a complete list of our advertising partners, please check out our full Advertising Disclosure. TheCollegeInvestor.com strives to keep its information accurate and up to date. The information in our reviews could be different from what you find when visiting a financial institution, service provider or a specific product's website. All products and services are presented without warranty.

FFELP Loans

The Federal Family Education Loan Program (FFELP) ended on June 30, 2010, more than ten years ago. Since July 1, 2010, all new federal education loans have been made through the Direct Loan Program.

However, many borrowers still have FFELP loans. According to the U.S. Department of Education, nearly 10.6 million borrowers still owe $238.8 billion in FFELP loans. That's an average of $22,528 per borrower. 

Almost half of these loans are held by commercial lenders, not the U.S. Department of Education or guarantee agencies. These borrowers have three main options available for dealing with their FFLEP loans:

  • Do nothing
  • Consolidate the FFELP loans into a Federal Direct Consolidation Loan
  • Refinance the FFELP loans into a private student loan

In this article, we'll examine the pros and cons of the latter two options.

Note: There has been an updated IDR Waiver that could impact old FFEL Loans. Learn about the IDR Waiver here. Furthermore, some of these programs may different temporarily due to these waivers.

Editor's Note: Some dates have been updated to reflect the current payment pause extension.

Table of Contents
Pros And Cons Of Consolidating FFELP Loans
Pros Of Consolidation
Cons Of Consolidation
Pros And Cons Of Refinancing FFELP Loans
Pros of Refinancing
Cons Of Refinancing
Final Thoughts

Pros And Cons Of Consolidating FFELP Loans

Here are the main advantages and disadvantages of consolidating your FFELP loans.

Pros Of Consolidation

Federal loans in the Direct Loan program are eligible for the payment pause and interest waiver. This temporary benefit will continue through 60 days after June 30, 2023 or 60 days after either the U.S. Department of Education can resume implementation of the student loan forgiveness program or the lawsuits seeking to block the program reach a conclusion, whichever comes first, but may be extended.

Consolidating FFELP loans into a Federal Direct Consolidation Loan will make the loans eligible for the payment pause and interest waiver as long as it's done prior to September 29, 2022.

Consolidating FFELP loans could also make them eligible for future student debt cancellation. President Biden has announced for providing $10,000 or $20,000 in student loan forgiveness for people who meet certain requirements. However, only Federally-held FFEL loans and Direct loans are eligible. 

Note: The Department of Education has said you are allowed to consolidate FFEL loans prior to September 29, 2022 for the $10,000 or $20,000 in loan forgiveness - even though the new loan date would be after 6/30/2022. Commercially-held FFEL Loans consolidated after September 29, 2022 will NOT be eligible for the one-time Biden student loan forgiveness.

Consolidating FFELP loans into a federal Direct Consolidation Loan makes those loans eligible for Public Service Loan Forgiveness (PSLF). The new consolidation loan will be eligible for tax-free loan forgiveness after the borrower makes 120 qualifying payments on the consolidation loan while working full-time for a public service employer.

Furthermore, with the PSLF Simplification Announcement President Biden made, FFEL Loan payments can count for PSLF as long as they are consolidated before October 31, 2022. This is important if you want old FFEL Loan Payments to count! 

Consolidation loans are eligible for a more flexible version of extended repayment. Without consolidation, borrowers are eligible for a 25-year repayment plan if they owe $30,000 or more in federal loans. With consolidation, the maximum repayment term depends on the amount owed, according to this table:

Loan Balance

Repayment Term

Less than $7,500

10 years (120 payments)

$7,500 to $9,999

12 years (144 payments)

$10,000 to $19,999

15 years (180 payments)

$20,000 to $39,999

20 years (240 payments)

$40,000 to $59,999

25 years (300 payments)

$60,000 or more

30 years (360 payments)

Increasing the repayment term from 10 years to 30 years will cut the monthly payment roughly in half. But it will also triple the total interest paid. Increasing the repayment term to 20 years will cut the monthly payments by more than a third, but will double the total interest paid.

FFELP borrowers are already eligible for Income-Based Repayment (IBR), which forgives the remaining debt after 25 years in repayment and has a monthly loan payment of 15% of discretionary income. But after consolidation, their FFELP loans may become eligible for the Revised Pay As You Earn Repayment Plan (REPAYE), which reduces the monthly payment to 10% of discretionary income and has a valuable ongoing interest subsidy.

Finally, consolidation can be used to rehabilitate defaulted FFELP loans. This is a one-time option. And the borrower must agree to repay the loans under an income-driven repayment plan.

Cons Of Consolidation

Consolidating FFELP loans doesn't come without risk. First, it could the payment clock, since a consolidation loan is a new loan. So a borrower in Income-Based Repayment (IBR) will lose the progress they've made toward 25-year forgiveness of the remaining debt.

Note: If you consolidate before October 2022, your prior payments WILL count for both IBR forgiveness and PSLF forgiveness (through the one-time payment count adjustment). However, once the waiver expires, consolidation would reset the clock again. THIS IS IMPORTANT - CONSOLIDATE YOUR LOANS BEFORE OCTOBER 31, 2022. 

Second, borrowers who are benefiting from lender-provided loan discounts, such as prompt payment discounts, will lose those discounts. The only discount provided on Direct Loans is a 0.25% interest rate reduction for making automatic monthly loan payments through autopay.

Pros And Cons Of Refinancing FFELP Loans

Now that we've covered the pros and cons of consolidating your FFELP loans, let's look at the benefits and drawbacks of refinancing them with a private lender.

Pros of Refinancing

Student loan refinancing may enable borrowers with excellent credit to qualify for a lower interest rate. This is especially true of older loans, which were made at much higher interest rates. The current federal student loan interest rates are at or near record lows.

Refinancing a private student loan without a cosigner is also one way of obtaining the equivalent of cosigner release. The new private student loan pays off the old loans, effectively releasing the cosigner from their obligation to repay the old loans. 

The main challenge is qualifying for the private refinance without a cosigner. But, if the borrower has a steady job and has been making all of their payments on-time for a few years, their credit profile may have improved enough for them to qualify for a private refinance on their own.

Cons Of Refinancing

Refinancing federal student loans into a private student loan will cause the loans to lose access to the superior benefits of federal student loans. In addition to the payment pause and interest waiver, these benefits include:

  • Economic hardship deferment
  • Unemployment deferment
  • General forbearances
  • Death and disability discharges
  • Income-driven repayment plans
  • Loan forgiveness options

Nevertheless, a borrower might consider refinancing if they have older FFELP loans from when the interest rates were as high as 8.5% fixed. The savings might be sufficient to compensate for the loss of repayment flexibility.

Final Thoughts

Both student loan consolidation and refinancing are one-way operations. Once your FFELP loans have been consolidated or refinanced, you can't undo the transaction. So make sure you've carefully thought the pros and cons before choosing either option. 

If you want to keep your existing federal benefits or qualify for more, consolidation is the way to go. But if interest savings is your main goal, refinancing might be right for you.

Finally, if you're looking to strike a balance between these two priorities, you might actually be better off keeping your FFELP loans separate and accelerating repayment of your highest-rate loan. That way you can reduce your interest cost in the short-term without giving up the ability to join the IBR plan or take out a Direct Consolidation Loan down the road.

Mark Kantrowitz
Mark Kantrowitz

Mark Kantrowitz is an expert on student financial aid, scholarships, 529 plans, and student loans. He has been quoted in more than 10,000 newspaper and magazine articles about college admissions and financial aid. Mark has written for the New York Times, Wall Street Journal, Washington Post, Reuters, U.S. News & World Report, MarketWatch, Money Magazine, Forbes, Newsweek, and Time. You can find his work on Student Aid Policy here.

Mark is the author of five bestselling books about scholarships and financial aid and holds seven patents. Mark serves on the editorial board of the Journal of Student Financial Aid, the editorial advisory board of Bottom Line/Personal, and is a member of the board of trustees of the Center for Excellence in Education. He previously served as a member of the board of directors of the National Scholarship Providers Association. Mark has two Bachelor’s degrees in mathematics and philosophy from the Massachusetts Institute of Technology (MIT) and a Master’s degree in computer science from Carnegie Mellon University (CMU).

Editor: Robert Farrington

Editorial Disclaimer: Opinions expressed here are author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, or other advertiser and have not been reviewed, approved or otherwise endorsed by any of these entities.
Comment Policy: We invite readers to respond with questions or comments. Comments may be held for moderation and are subject to approval. Comments are solely the opinions of their authors'. The responses in the comments below are not provided or commissioned by any advertiser. Responses have not been reviewed, approved or otherwise endorsed by any company. It is not anyone's responsibility to ensure all posts and/or questions are answered.
Subscribe
Connect with
I allow to create an account
When you login first time using a Social Login button, we collect your account public profile information shared by Social Login provider, based on your privacy settings. We also get your email address to automatically create an account for you in our website. Once your account is created, you'll be logged-in to this account.
DisagreeAgree
Notify of

I allow to create an account
When you login first time using a Social Login button, we collect your account public profile information shared by Social Login provider, based on your privacy settings. We also get your email address to automatically create an account for you in our website. Once your account is created, you'll be logged-in to this account.
DisagreeAgree

80 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments

Primary Sidebar

Student Loan Resources

Featured Lender Reviews

>  Credible (recommended)
>  Splash (recommended)
>  ELFI
>  LendKey
>  Earnest
>  Laurel Road

Paying For College

  • Best Student Loans And Rates
  • Best Private Student Loans
  • Student Loan And Financial Aid Programs By State
  • Student Loans For Community College
  • Best International Student Loans
  • Best Student Loans For Graduate School
  • Best Student Loans For Your MBA
  • Best Student Loans For Medical School
  • Best No-Cosigner Private Student Loans
  • How To Get A Student Loan With Bad Credit

Navigating Repayment

  • How To Select The Best Student Loan Repayment Plan
  • 5 Legal Ways To Lower Your Student Loan Payment
  • How To Use A 529 Plan For Student Loan Repayment
  • These Companies Offer Student Loan Repayment Assistance

Student Loan Forgiveness

  • Student Loan Forgiveness Programs (The Complete List)
  • Student Loan Forgiveness Programs By State
  • President Biden’s Student Loan Forgiveness Plan
  • Public Service Loan Forgiveness
  • Borrower Defense To Repayment
  • For-Profit College Student Loan Forgiveness List
  • Private Student Loan Forgiveness
  • Trade School Loan Forgiveness Programs

Student Loan Refinance

  • Best Student Loan Refinance Companies
  • Best Student Loan Refinancing Bonuses And Promotional Offers
  • Lenders That Offer Student Loan Refinancing Without A Degree
  • How To Refinance An International Student Loan
  • Best Medical School Student Loan Refinancing

More On Student Loans

  • Top Student Loan Scams
  • Does The Government Profit Off Of Student Loans?
  • Statue Of Limitations Laws For Student Loans
  • What Should You Do With Your Old FFELP Loans?
  • How To Get A Refund Of Your Federal Student Loan Payments

Footer

Who We Are

The College Investor is an independent, advertising-supported financial media publisher, focusing on news, product reviews, and comparisons.

Connect

  • Contact Us
  • Advertise
  • Press & Media

About

  • About
  • Our Team
  • Podcast
  • Editorial Guidelines
  • How We Make Money
  • Archives

Social

Copyright © 2023 · The College Investor · Privacy Policy ·Terms of Service · DO NOT Sell My Personal Information

wpDiscuz