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Federal Direct Loan Comparison Chart|Student Financial Aid


Federal Family Education Loan Program (FFELP)

(i.e., Stafford Loan, Parent PLUS Loan, and Grad PLUS Loan)

Federal Direct Loan Program (FDL)

(i.e., Direct Loan, Parent PLUS Direct Loan, and Grad PLUS Direct Loan)

Annual & Aggregate Loan Limits

The same annual and aggregate loan limits that apply to the Federal Stafford Loan Program also apply to the Federal Direct Loan Program

Borrower Benefits

Legislation passed by Congress prior to the current economic issues led to the elimination of borrower benefits. It costs more for lenders to make Stafford loans now. A strengthened economy will not bring back these benefits. Benefits are practically non-existent on new loans. Benefits on older loans may be lost when the loan is sold.

The legislative changes that led to reduced benefits in FFELP did not reduce Federal Direct Loan benefits. In some cases, it actually strengthened them (e.g., Public Loan Forgiveness, etc.). Additionally, benefits remain with the loan through the duration of repayment.

Eligibility Criteria


The criteria used to determine who is eligible for Federal Stafford Loan and Federal Direct Loan is identical.

Fees (interest Rate) for Subsidized and Unsubsidized Loans

The maximum interest rate a lender can charge is set by Congress, and is the same rate for FFELP and Federal Direct Loans.

Fees (Up Front)

Students with FFELP Stafford Loans are generally charged a 1% Default Fee on the loan before disbursement. In some cases, the fee may be higher.

Direct Loan borrowers are charged a net .5% (half of a percent) fee on the loan before disbursement. This means the student receives more money from each loan disbursement.

Income Contingent Repayment (ICR)


FFELP does not have this program. It offers the Income Sensitive Repayment plan, which is not as flexible as ICR.


Having Federal Direct Loans meets one of the criteria for this program. ICR can make loans less expensive for qualifying borrowers who are struggling with repayment.

Interest Capitalization


Interest may be capitalized at a higher rate than with Federal Direct Loans.


Interest capitalized at less than statutory maximum.

Loan Consolidation

Due to the legislation changes and economic issues, the majority of lenders are not offering loan consolidation any longer. Many companies specializing in loan consolidation have gone out of business.

Consolidation remains a viable option. Students can consolidate their FFELP Loans with the Federal Direct Loans when they enter repayment if they so choose.

Loan Process

The FFELP process can lead to confusion due to working with multiple lenders, servicers, and guaranty agencies.

Federal Direct Lending provides a more streamlined flow for loans, which makes navigating the process much simpler for borrowers.

Loan Repayment

Borrowers repay private lenders

Borrowers repay the federal government

Loan Sale

Many lenders are selling their loans to the government via the "PUT" Program to help with their liquidity issues.

Loans are with the federal government and never sold to other lenders, so this provides single servicing for the life of the loan.

Parent PLUS Loan Interest Rate

Parent PLUS Interest Rate is 8.5%

Parent PLUS interest Rate is 7.9%

Public Service Loan Forgiveness

This is not an option under FFELP, as you can only qualify for this with Federal Direct Loans.

Having Federal Direct Loans meets one of the criteria for this program.


Many lenders have left FFELP due to issues with liquidity, forcing some borrowers to find new lenders. This trend is likely to continue in the future.

The liquidity issues that are impacting FFELP lenders are not affecting Federal Direct Loans. The funding source for Federal Direct Loans, the Federal Government, is more stable.

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