Federal Supplemental Loans For Students

Written by Nicole Madison
Bookmark and Share

Federal Supplement Loans or Students are just one of may loan types that are eligible for consolidation under FFELP. FFELP is the Federal Family Education Loan Program. FFELP consolidation loans are lent to borrowers by banks, credit unions, savings and loan associations, as well as state guaranty agencies and other financial institutions.

Consolidating Federal Supplemental Loans For Students

The Federal Supplemental Loan for Students is a loan with a maximum loan amount of $10,000 per year and $73,000 cumulative. This loan is guaranteed, by the government, against borrower default, death, or disability. Tax returns are withheld from borrowers who are in default on Federal Supplemental Loans and in some states licensure can be denied to students in default on federal student loans.

Interest on Federal Supplemental Loans for Students received after July 1, 1993 is a variable rate based on 52 week T-bill plus 3.10 percent, with a cap of 8.25 percent. For loans made before July 1, 1993 interest rates are determined in the same way, except the rate cap is 12 percent. Interest accrues on this loan while the student is enrolled in school and in deferment status.

The Federal Supplemental Loan for Students can be consolidated to lower payments, extend repayment length, and possibly save money. Consolidating Federal Supplemental Loans allows the borrower to save money when interest rates are low by consolidating at fixed, lower interest rates. Lower payments can positively impact a borrowers budget by making loan payments more manageable, leaving more money for the borrower to use for other bills, and keeping the borrower out of default.


Bookmark and Share