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FFEL Loans = Second Class Federal Loans folks are receiving payment notices for federal loans even before February when the Great Restart is anticipated.  Why is this?

A few months ago, Congress finally addressed the older Federal Family Education Loans (FFEL or FFELP loans), and in the expansion to the CARES Act, ensured that all defaulted FFEL loans cease collection and receive a 0% interest rate, same as the newer Direct federal loans.  In addition, any FFEL loan that went into default since March 13, 2020 would be returned to good standing.  All guarantee agencies who held these loans were to assign them to the Department of Education and it was requested that the credit bureaus remove the record of default.

Note this was only for those FFEL loans which were already defaulted, or went into default during the pandemic.

This  notice is intended to remind folks of this and to please reach out to us if your credit report has not been fixed.  We’ve given them more than enough time — five months to make this happen now.

If you’d like to know more about the expansion of the CARES Act to include FFEL loans, please watch our video on Youtube:

In most cases, it’s a good idea to consolidate your older FFEL loans to the newer shinier Direct loans — but not always!  If you have questions about when and why you should or should not do this, please reach out to us.  There are specific reasons why you might not want to do this to avoid losing any months already accrued under an IDR program for non-public service borrowers, to avoid unnecessary capitalization of interest if you’ll likely end up repaying the balance due to strong earnings, and to avoid having any Parent Plus loans taint your options for repayment for your own federal loans.



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