The Federal Family Education Loan Program:
A Pillar of Economy in Economically Trying Times
By Tom Joyce, Sallie Mae

In an era where the purchasing power of grant and scholarship dollars lags behind precipitously higher education costs, the value of the Federal Family Education Loan Program (FFELP) continues to be a model of efficiency.

As a federally subsidized program, the FFELP still represents the most economical way for Americans to meet the costs of a higher education. In 2002 alone, this unique public-private partnership provided more than seven million new FFELP loans totaling nearly $29 billion to thousands of students and their families.

These numbers underscore the growing importance of the FFELP program in the higher education community. As an indication, the National Association of Student Financial Aid Administrators reports that the average student aid award covers only 72 percent of the average demonstrated financial need for undergraduate students.

While students may be taking out more loans to meet the requirements of today’s higher education environment, interest payments have changed very little. According to the Department of Education, an undergraduate student who graduated in 1987 with $8,000 in loans and an interest rate of nine percent would pay the same amount of interest ($4,200) as an undergraduate student graduating with $18,000 in loan debt today, thanks to lower interest rates and student loan tax deductions.

All federally sponsored programs should be held accountable to the American taxpayer. The FFELP program is no exception. In fact, while loan volume has doubled since 1991, program participants have actually been able to bring down costs from $6.1 billion to $2.6 billion. In 1991 the FFELP program cost the taxpayer 8.5c for every $1 outstanding, yet by 2001, this cost had been reduced to a shadow of that amount—less than 1c for every $1 outstanding.

These are particularly compelling figures to reflect upon during trying economic times, and particularly during the reauthorization of the Higher Education Act. To find out more about the efficiencies created through the FFELP program visit www.studentloanfacts.org.