Issue Primers

Federal student loans play a crucial role in ensuring access to an affordable higher education for millions of American students. According to the National Center for Education Statistics, more than 40% of first-time, full-time undergraduate students borrow for college. By the end of September 2022, the federal government held an outstanding student loan balance of $1.63 trillion, including $1.42 trillion in Direct Loans.1 Student loan borrowers generally hold one or more of these types of loans: (1) federal student loans made directly by the U.S. Department of Education (ED) through the William D. Ford Direct Loan program (Direct Loans), (2) federal student loans previously made under the Federal Family Education Loan (FFEL) program, which are federally guaranteed,2 or (3) private student loans. Though ED either directly awards or guarantees all federal student loans, it does not service the loans itself. Rather, ED contracts with private companies and organizations to handle loans in repayment.