Before June 30, 2010, students in the United States could finance their college education with federally-guaranteed student loans. Before June 30, 2010, federally guaranteed student loans were the only financing option available to American college students.

Federal Family Education Loans program was discontinued, and the guaranteed student loan program became a separate program. Direct federal student loans were introduced immediately to replace it. Direct federal loans remain available.

What is the Federally Guaranteed Student Loan?

The federal government "guaranteed' loans issued through the FFEL Program. They were made available by private lenders. If a student did not repay his or her FFEL loan the federal government would buy the loan from the lender at 97 percent and take over all administrative and payment duties.

Federal government subsidies were also provided to lenders who issued FFELs. These subsidies helped to reduce the risks that private lenders were taking when they provided low-cost loans for students.

FFEL included options such as the Stafford Loan and consolidation loans. They are still widely available. However, private lenders do not offer these loans anymore. The U.S. Department of Education funds and disburses these loans directly.

What happened with federally guaranteed loans for students?

The Student Aid and Fiscal Responsibilty act, which was passed on January 5, 2010, ended the FFEL. Even though no new FFELs were issued after June 30, 2010, millions of former students are still paying back these debts today.

According to National Student Loan Data System around 7 million Americans currently have FFELs in repayment. Their total balances amount to over $154 billion.

Borrowers of FFELs who have not yet repaid their loans are expected, like any other borrower, to do so. The government would still be liable for the loss incurred by the lender if the student defaulted on their loan. The government would be responsible for the collection of the remaining loan balance.

What are the current options for student loans?

Fortunately, federal student loans are still available. The federal government still offers several grants and loans.

Here are some of the current student loan choices available in America:

  • Direct subsidized Loans: Federal loans based on financial need. The balance of the student's loan is not charged interest during school. There is a grace period after graduation for six months.
  • Direct Loans Without Subsidies (Staffford Loans): The amount of these loans is determined solely by the chosen college/university. All interest is the responsibility of the student, both during and after school.
  • Federal Direct Plus Loans:These loans are for parents and graduate students. Credit checks are required.
  • Direct federal consolidation loans: You can use consolidation loans to combine the student's entire federal loan. This can reduce interest and streamline payments.

FAFSA is the Free Application of Federal Student Aid. You will also find out if you are eligible for federal grants by filling out this application.

Federal grants consist of the Pell Grant and Federal Supplemental Educational Opportunity Grants. Financial need is taken into consideration when determining the amount of grant money.


  • owenbarrett

    I'm Owen Barrett, a 31-year-old educational blogger and traveler. I enjoy writing about the places I've visited and sharing educational content about travel and culture. When I'm not writing or traveling, I like spending time with my family and friends.