| Established by an Act of Congress in 1965 and begun | | | | The other program with attracts major funding is the |
| in 1966, the Federal Family Education Loan Program | | | | student PLUS loans program which is designed to |
| (FFELP) is a partnership program between the federal | | | | allow parents to take out loans on behalf of their |
| government and private lenders and an umbrella | | | | children. This program was extended in 2006 and is |
| program which includes Stafford loans, student PLUS | | | | now also available to professional and graduate |
| loans and Perkins loans. Since it started more than half | | | | students. The student PLUS loans program is |
| a trillion dollars have been disbursed through this | | | | becoming an increasingly important part of college |
| program. | | | | funding these days. |
| Funds for the program are provided by a network of | | | | Applications to the Federal Family Education Loan |
| independent banks, credit unions and other financial | | | | Program are normally made using a Free Application |
| institutions and lenders are generally happy to make | | | | for Student Aid (FAFSA) application form which is |
| money available in what would normally be considered | | | | submitted to the loans officer at the college for which |
| a high risk area of lending because loans are to a large | | | | the student has been accepted. Applications are then |
| degree (although not totally) underwritten by the | | | | examined and loans granted on the basis of the |
| federal government. In about five percent of cases | | | | information provided and the availability of funds for |
| private guarantors do become involved with defaulted | | | | disbursement. |
| loans and are able to make application to the federal | | | | Loans are normally disbursed at least twice each year |
| government for at least partial reimbursement. | | | | (depending upon the academic timetable followed by |
| The vast majority of funds are used for subsidized | | | | the college) and it is common for the bulk of each loan |
| and unsubsidized Stafford loans. In the case of | | | | to be paid directly to the college to cover tuition and |
| subsidized loans the federal government pays the | | | | other fees, with the balance then being paid over to |
| interest on loans while students are attending full-time | | | | the student or parent, less fees. |
| courses (and for up to six months after graduation), | | | | In most, but certainly not all cases, a fee of about 4% |
| while in the case of unsubsidized loans students are | | | | is payable which is made up of a 3% administration, or |
| responsible for paying the interest due on their loans. | | | | 'originating', fee and a 1% insurance fee. It is not |
| Interest is not however normally paid on unsubsidized | | | | uncommon however for higher fees to be charged |
| loans while a student is attending full-time education | | | | and so it is important to ask about the fee structure |
| (and again for up to six months after graduation) but is | | | | and, if necessary, to shop around when applying for |
| added to the loan. | | | | student loans. |