Guide to Understand: FFELP Stafford Subsidized and Unsubsidized Loans | 2023

Student Loans Are Complicated.

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FFELP Stafford Loans are a type of federal student loan that was available under the Federal Family Education Loan Program. This program, which was discontinued in 2010, offered two kinds of FFELP or FFEL Loans: Stafford Subsidized Loans and Stafford Unsubsidized Loans.

Currently, federal student loans are issued through the Direct Loan Program.

The latest student loan forgiveness initiatives authorized by the Biden administration apply to Direct Loans. These include targeted relief for borrowers earning less than $125,000 annually. Stafford Loans are also eligible for many of these benefits, although some borrowers may need to consolidate their FFEL Loans into a Direct Consolidation Loan to avail of these benefits.

In the following sections, we will delve deeper into FFELP Stafford Loans and how to get them forgiven.

Understanding Stafford Loans

Stafford Loans were a form of loan that students could avail from the federal government to cover their college or trade school expenses. Prior to the termination of the FFEL Program in July 2010, individuals could opt for a subsidized Stafford Loan, where the government covers the interest while the student is in school, or an unsubsidized Stafford Loan, where the borrower is responsible for all the interest over the loan’s lifespan. 

Unsubsidized Stafford Loans accrue interest faster as the accumulated interest is added to the principal loan balance when the student graduates, leading to interest on interest.

No new Stafford Loans have been issued since 2010, but many Americans still have outstanding balances on these loans.

Comparing Direct Loans and Stafford Loans

Direct Loans and Stafford Loans are fundamentally the same: they are federal loans granted to undergraduate students without the need for a credit check or a cosigner. 

The key difference lies in the lender. Direct Loans are issued directly to students by the Education Department, whereas Stafford Loans were provided by banks, credit unions, and other private lenders, with the federal government guaranteeing the loan in case of default.

Stafford Loans were replaced by Direct Subsidized and Unsubsidized Loans when the FFEL Program was phased out in 2010. Despite this, many people and organizations still refer to Direct Loan Program loans as “Stafford Loans” or “Direct Stafford Loans,” even though these are not their official titles.

Federal Direct Loans are available to undergraduate and graduate/professional students who are enrolled at least half-time. The overall amount you can borrow to pay for education is limited by annual and aggregate loan restrictions. After you drop below half-time enrollment, loan payments begin. However, you will have a six-month grace period to prepare for your first payment.

Pell Grant vs. Stafford Loan 

Federal student funding includes Stafford Loans and Pell Grants. The key distinction between the two is that Stafford Loans must be repaid. 

Pell Grants are not required to be repaid. 

There is no interest rate or time limit for repayment. They are monetary awards made to undergraduate students who demonstrate financial need on their Free Application for Federal Student Aid (FAFSA).

Stafford Loans and Loan Forgiveness

Stafford Loans are eligible for various loan forgiveness programs, such as President Biden’s initiative to cancel up to $20,000 in federal student loans for millions of individuals. However, to qualify for cancellation and forgiveness, borrowers with Stafford Loans typically need to consolidate these loans into a Direct Consolidation Loan.

How can you determine if you need to consolidate?

You will not need to consolidate if you did not have to pay your Stafford Loans during the pandemic since they were eligible for the payment pause. 

If your loans were not eligible for the freeze, they are commercially held FFEL Loans that must be consolidated into a Direct Loan before they are eligible for the newest forgiveness chances offered by the Education Department. 

You can consolidate your loans by going to the Federal Student Aid website,

Stafford Loan Forgiveness Programs

There are three primary loan forgiveness opportunities for Stafford Loans:

President Biden’s mass debt cancellation plan will forgive $10,000 for borrowers who didn’t receive a Pell Grant, a type of financial aid for low-income undergraduate students, and $20,000 for those who did. 

This relief is limited to borrowers who earned less than $125,000 or married couples earning less than $250,000.

Private student loans are not eligible for cancellation, however, Parent PLUS and Perkins Loans are.

The U.S. Department of Education will determine your eligibility by examining the adjusted gross income on your tax return for either 2020 or 2021, whichever is lower. 

Limited Public Service Loan Forgiveness Waiver

Individuals who worked full-time for the government or a nonprofit after October 1, 2007, are eligible for PSLF credit under the Limited Public Service Loan Forgiveness Waiver. To qualify for the waiver, you must have consolidated your FFEL Stafford Loan into a Direct Loan before October 31, 2022.

Income-driven repayment plan forgiveness

After 20 years of making monthly payments under an IDR Plan, income-driven repayment plan forgiveness cancels your outstanding balance. Later this year, the Education Department will use a one-time waiver and adjustment to credit millions of borrowers with additional payments toward IDR forgiveness.

Borrowers will receive credit for payments paid, regardless of the payment plan they were on at the time. Except for school deferral, months spent on deferment prior to 2013 will likewise be counted as qualified payments by the government. 

It will also consider forbearances of 12 consecutive months or more, as well as 36 cumulative months or more, toward forgiveness, for both income-driven repayment and the Public Service Loan Forgiveness program.


FFEL Stafford Subsidized and Unsubsidized student loans can indeed be forgiven, but the process may require consolidation before that can happen. Navigating these options can be complex and it’s crucial to make informed decisions about your financial future.

Don’t leave your student loan situation to chance. Reach out to a student loan advisor today who can provide personalized guidance based on your unique circumstances. They can help you understand your options, determine if consolidation is right for you, and guide you through the process of maximizing your forgiveness opportunities.

Take control of your financial future. Connect with a student loan advisor now and start your journey towards financial freedom.


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