Department of Education

STUDENT LOANS OVERVIEW

Fiscal Year 2025 Budget Proposal

CONTENTS

Page

Federal Student Loans:

Authorization............................................................................................................................. 2 

Program Description................................................................................................................. 4 

Repayment Plans ..................................................................................................................... 5 

Interest Rates and Loan Limits—By Type of Loan ................................................................. 11

Borrower Interest Rates by Academic Year and Program Component ..................................13

Student Loan Program Maximums .........................................................................................14

Credit Reform Estimates ........................................................................................................15

Outstanding Loan Levels........................................................................................................16

FY 2025 Budget Proposal

FY 2025 Estimated New Direct Loan Volume ........................................................................18

FY 2025 Estimated Consolidation Loan Volume ....................................................................19

The Role of Student Loans.....................................................................................................20

Postsecondary Cost, Borrowing, and Enrollment by Institutional Sector................................22

FFEL Liquidating Account ......................................................................................................23

Federal Student Loan Reserve Fund .....................................................................................24

Program Output Measures

Direct Loans ...........................................................................................................................25

FFEL Loans ............................................................................................................................26

Median Federal Student Loan Debt........................................................................................27

Undergraduate and Graduate Borrower Distribution by Family Income................................. 28

Undergraduate Students by Income Category .......................................................................29

Loan Volume by Institutional Sector.......................................................................................31

Loan Volume by Subsidized and Unsubsidized Stafford Loans .............................................32

Program Performance Measures

Performance Measures ..........................................................................................................32

National Student Loan Cohort Default Rate ...........................................................................34

FY 2025 Cohort Lifetime Dollar Default and Recovery Rates ................................................35

Account Summary Table ........................................................................................................38
STUDENT LOANS OVERVIEW

1 

Federal Family Education Loan Program (FFEL)

(Higher Education Act of 1965, Title IV, Part B)

William D. Ford Federal Direct Loan Program (Direct Loan) 

(Higher Education Act of 1965, Title IV, Part D) 

(dollars in thousands)

FY 2025 Authorization: Indefinite 

Mandatory Budget Authority: 

Loan Subsidies 2024 Annualized CR 2025 Request Change

Net Loan Subsidies:

DL Net New Loan Subsidy $32,986,256 $42,266,917 $9,280,661

DL Net Reestimate1 64,160,384 0 -64,160,384

DL Net Modification 0 0 0

DL Total Net Subsidy 97,146,640 42,266,917 -54,879,723

FFEL Net Reestimate 9,637,242 0 -9,637,242

FFEL Net Modification 0 0 0

FFEL Total Net Subsidy 9,637,242 0 -9,637,242

1 The Direct Loan (DL) upward net reestimate for fiscal year 2024 is primarily due to updated discharge assumptions 

outside of the Income-Driven Repayment (IDR) model.
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

2 

FEDERAL STUDENT LOANS

Authorization

2005: Language authorizing the loan programs beyond fiscal year 2008 was contained in the 

Higher Education Reconciliation Act (HERA) of 2005 (P.L. 109-171). 

2007-2008: The College Cost Reduction and Access Act (CCRAA) (P.L. 110-84) amended loan 

and other Higher Education Act (HEA) programs. The Ensuring Continued Access to Student 

Loans Act (ECASLA) of 2008 (P.L. 110-227) provided the Government with purchase authority 

to buy Federal guaranteed student loans from lenders and ensure access to FFEL loans. It also

increased Unsubsidized Stafford Loan limits for undergraduates. 

2010: The SAFRA Act (formerly the Student Aid and Fiscal Responsibility Act), Title II, Subtitle 

A of the larger Health Care and Education Reconciliation Act of 2010 (P.L. 111-152), terminated 

the FFEL loan program. As of July 1, 2010, all new Federal student loans originate in the Direct 

Loan (DL) program. 

2011: The Budget Control Act of 2011 (P.L. 112-25) generated savings by eliminating 

Subsidized Stafford Loans for graduate and professional students and ending most repayment 

incentives for all borrowers—effective July 1, 2012. Savings helped cover a shortfall in the Pell 

Grant program.

2012: The Consolidated Appropriations Act, 2012, (P.L. 112-74) eliminated interest payments 

during the grace period for loans made in academic years (AY) 2012-2013 and 2013-2014 and

introduced a lender option to change the basis for the Government-funded lender interest 

subsidy known as a special allowance payment which ensures a guaranteed rate of return on 

FFEL student loans. The lenders were now given the option to change the calculation basis 

from commercial paper to an alternative index—the 1-month London InterBank Offered Rate 

(LIBOR)—for determining special allowance. 

2012: The Moving Ahead for Progress in the 21st Century Act (P.L. 112-141), signed July 6, 

2012, extended the Subsidized Stafford interest rate of 3.4 percent for 1 year and limited the 

Subsidized Stafford in-school interest subsidy to 150 percent of normal program length. 

2013: The Bipartisan Student Loan Certainty Act of 2013 (P.L. 113-28) tied student loan interest 

rates to the high-yield 10-year Treasury note plus a basis point add-on per loan type and a cap. 

2013: The Bipartisan Budget Act of 2013 (P.L. 113-67) eliminated the amount that FFEL 

guaranty agencies—State and private nonprofit entities that provide default insurance payments 

to lenders, as well as collection and default counseling activities—could keep from defaulted 

loan recoveries. The Act also reduced the maximum amount guaranty agencies could charge a 

borrower on a rehabilitated loan (a defaulted loan that has returned to performing status) from 

18.5 to 16 percent. Guaranty agencies were also now required to send any rehabilitated loans 

to the Department if they could not find a private lender buyer.
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

3 

2016: The Consolidated Appropriations Act, 2016, (P.L. 114-113) increased the reimbursement 

percentage paid to guaranty agencies by the Department of Education from 95 percent to 100 

percent and extended Account Maintenance Fees paid to guaranty agencies. 

2018: The Bipartisan Budget Act of 2018 (P.L. 115-123) continued the authority to make 

Account Maintenance Fee payments to guaranty agencies and modified existing authority to 

allow waiving cohort default rate requirements for public institutions of higher education 

operating in economically distressed counties. In addition, the Act provided authority for 

emergency relief to student loan borrowers who were victims of hurricanes Harvey, Irma, or 

Maria in places such as Puerto Rico and the U.S. Virgin Islands.

2018 & 2019: The Consolidated Appropriations Act, 2018, (P.L. 115-141) and the 2019 

Appropriations Act funding the Department of Education (P.L. 115-245) each provided $350 

million toward Temporary Expanded Public Service Loan Forgiveness (TEPSLF) for borrowers 

who met eligibility for public service employment but were not enrolled in a qualified 

repayment plan. 

2020: The Consolidated Appropriations Act, 2020, (P.L. 116-93) provided $50 million for 

TEPSLF. The Coronavirus Aid, Relief, and Economic Security (CARES) Act automatically 

suspended principal and interest payments and set interest rates to 0 percent on federally held 

student loans through September 30, 2020. During the payment suspension, borrowers can 

continue making payments, and any payments made during this time will be applied directly to 

principal. On August 8, 2020, the President signed an Executive order that continued the 

CARES Act borrower relief provisions through December 31, 2020.

2021: The Consolidated Appropriations Act, 2021, (P.L. 116-260) provided $50 million for 

TEPSLF and repealed the 150 percent of normal program length limitation on lifetime 

subsidized loan eligibility. On December 4, 2020, the CARES Act borrower relief provisions 

were extended by administrative action through January 31, 2021. On January 20, 2021, the 

provisions were further extended through September 30, 2021. On August 6, 2021, the 

Department announced an extension of the relief provisions until January 31, 2022.

2022: The Consolidated Appropriations Act, 2022, (P.L. 117-103) permitted lenders to change 

the special allowance calculation basis from LIBOR to the Secured Overnight Financing Rate 

(SOFR). On December 22, 2021, the Department announced an extension of the CARES Act 

borrower relief provisions through May 1, 2022. 

2023: The Joint Consolidation Loan Separation Act (P.L. 117-200) allowed joint consolidation 

loan borrowers to separate their joint loan obligation into separate individual Direct 

Consolidation Loans. On November 22, 2022, the Department announced an extension of the 

CARES Act borrower relief provisions through August 30, 2023. 
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

4 

PROGRAM DESCRIPTION

The Federal student loan programs provide students and their families with funds to help meet 

postsecondary education costs. Because funding for the loan programs is provided through 

permanent and indefinite budget authority, student loans are considered separately for budget 

purposes from other Federal student financial assistance programs; however, they should be 

viewed as part of the overall Federal effort to expand access to higher education.

In the FFEL program, private lenders provided loan capital, backed by a Federal guarantee on 

the loans. The Federal Government provided interest subsidies to lenders and reimbursement 

to guaranty agencies for most costs associated with loan defaults and other write-offs. As 

stipulated by SAFRA, the FFEL program ceased making new loans as of July 2010. Since that 

date, the Direct Loan program has originated all new Federal loans. The Direct Loan program, 

created by the Higher Education Amendments of 1992 as a pilot program and expanded by the 

Student Loan Reform Act of 1993, has operated since July 1, 1994. Under this program, the 

Federal Government provides the loan capital, postsecondary schools disburse the loans, and 

loan servicing is handled by the Department through private contractors. 

In fiscal year 2025, new Direct Loan volume is estimated at $93.1 billion, and Consolidation 

Loans (which include older loans) are estimated at $41.5 billion, for a total of $134.6 billion. In 

fiscal year 2025, new Direct Loan volume alone will account for nearly 69 percent of all new 

postsecondary student aid (including loans, grants, and work-study) available from the 

Department. 

Four types of loans are available under the current Direct Loan program: Subsidized Stafford, 

Unsubsidized Stafford, PLUS, and Consolidation. Loans can be used only for qualified 

educational expenses, although credit balances that result from loans greater than the cost of 

tuition, fees, and campus housing are paid to students. Subsidized Stafford Loans are available 

to undergraduate students from low- and moderate-income families and are awarded based on 

unmet financial need. Unsubsidized Stafford, PLUS, and Consolidation Loans are available to 

borrowers at all income levels. PLUS Loans are available to parents of dependent 

undergraduate students and to graduate and professional students. Consolidation Loans allow 

borrowers to combine all Higher Education Act Title IV loans—including FFEL, Direct Loans, 

and Perkins Loans, as well as some loans made under the Public Health Service Act—into one 

loan, eliminating multiple monthly payments. 

Direct Loan borrowers are charged a loan origination fee upon taking out a loan. Subsidized and 

Unsubsidized Stafford Loan borrowers pay an origination fee equal to 1 percent of principal. 

PLUS Loan borrowers pay a 4 percent origination fee. Under sequestration, which is intended to 

limit program costs, the origination fees for Subsidized and Unsubsidized Stafford, and PLUS 

Loans are required to increase based on a percentage that OMB calculates for non-exempt 

nondefense mandatory programs. The sequestration percentage is calculated using a 

methodology described in the Budget Control Act of 2011. In fiscal year 2024—the most recent 

applicable year—the nondefense mandatory sequester percentage will be 5.7 percent, with 

Stafford and Unsubsidized Stafford loan origination fees equal to 1.057 percent and PLUS loan 

fees equal to 4.228 percent. The 2025 Budget proposes to eliminate origination fees.
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

5 

The COVID-19 emergency relief measures in the Direct Loan program, including suspending 

loan payments, halting collections on defaulted loans, and setting interest rates to 0 percent 

have ended. Interest began accruing on September 1, 2023, and the first payments were due in 

October. To help borrowers successfully return to repayment, the Department created a 

temporary on-ramp period through September 30, 2024. This on-ramp prevents the worst 

consequences of missed, late, or partial payments. It protects borrowers from having a 

delinquency reported to credit reporting agencies. While payments are due and interest accrues 

during the on-ramp period, interest does not capitalize. There is uncertainty regarding cost 

estimates as millions of borrowers have not been required to make monthly payments on their 

federal student loans since March 2020 and a portion of those borrowers have no previous 

experience in making loan payments.

In addition to the on-ramp period, the Department created Fresh Start, a one-time, temporary 

program that offers special benefits for borrowers with defaulted federal student loans. These 

benefits include halted collections on defaulted loans through September 30, 2024.

Loan Repayment Plans

Borrowers may choose from four basic types of repayment plans: standard, graduated, 

extended, and Income-Driven Repayment (IDR). The IDR plans include Income Contingent 

Repayment (ICR), Income-Based Repayment (IBR), New IBR, Pay As You Earn (PAYE), and 

Saving on a Valuable Education (SAVE). 

FFEL borrowers may change repayment plans once per year, and Direct Loan borrowers may 

switch between repayment plans at any time. In general, student loans may be discharged 

when borrowers die, are totally and permanently disabled, or in limited cases, through personal 

bankruptcy. In addition, borrowers who were falsely certified as eligible or were misled by school 

actions or misconduct—often referred to as a borrower defense to repayment—may be eligible 

to have their loans discharged. Finally, if borrowers were enrolled in or recently withdrew from a 

school that closes, they may be eligible for closed-school loan discharge.

There are four main features of repayment plans: eligibility, monthly payment, repayment term, 

and forgiveness. Each repayment plan’s features are summarized on the next page. The main 

features of IDR plans are household income and family size.

According to the Department’s September 2023 Federal Student Aid (FSA) Data Center 

quarterly report (the most recent report publicly available), as of the fourth quarter of fiscal year 

2023 approximately 10 million Direct Loan borrowers were enrolled in IDR plans, representing 

about 32 percent of all Direct Loan borrowers and 50 percent of all Direct Loan outstanding 

dollars in repayment status. Borrower participation reflects a 19 percent increase over fiscal 

year 2022 fourth quarter and a 12 percent increase in dollars being repaid via IDR plans. The 

percentage of outstanding Direct Loan dollars not currently listed on a repayment plan has fallen

since the end of the COVID-19 pandemic. As of the fourth quarter of fiscal year 2022, that 

percentage was 18 percent. As of the fourth quarter of fiscal year 2023, the percentage was 2 

percent.
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

6 

History of Repayment Plans

1990s to early 2000s: Standard, Graduated, Extended, and ICR have been available since the 

early 1990s. The number of available repayment plans remained constant until the late 2000s.

2007: CCRAA established the IBR plan, which set monthly loan repayments at 15 percent of a 

borrower’s discretionary income, capped at the 10-year standard repayment plan amount, with 

forgiveness of any remaining loan balance after 25 years of repayment.

2010: SAFRA created a second IBR plan, referred to below as post-2014 IBR, which reduced 

monthly payments for future borrowers starting July 1, 2014, from 15 percent of a borrower’s 

discretionary income to 10 percent, and reduced the maximum period for a borrower to receive 

loan forgiveness from 25 to 20 years.

October 2011: Under regulatory authority, the Department accelerated the SAFRA IBR benefits 

for qualified borrowers who were new borrowers as of October 1, 2007, and had received a 

Direct Loan disbursement on or after October 1, 2011. This PAYE plan became available for 

eligible borrowers on December 21, 2012. 

December 2015: Under regulatory authority, the Department began offering the modified

Revised Pay As You Earn (REPAYE) plan to all qualified student borrowers regardless of when 

they borrowed. The REPAYE plan resembles PAYE, with a few key exceptions – such as 

eliminating the payment cap from the 10-year standard repayment plan and providing a more 

generous interest subsidy. As in PAYE, the Government pays 100 percent of interest on 

subsidized loans for the first three years. However, under REPAYE the Government will also 

pay 50 percent of unpaid interest on subsidized loans after three years and 50 percent of 

interest on unsubsidized loans in all years.

June 2023: Under regulatory authority, the Department finalized the most affordable repayment 

plan in history, called the Saving on a Valuable Education (SAVE) plan. This income-driven 

repayment plan will cut borrowers’ monthly payments in half, allow many borrowers to make $0 

monthly payments, save other borrowers around $1,000 per year, and ensure borrowers don’t 

see their balances grow from unpaid interest. Specifically, the plan will:

• For undergraduate loans, effective July 2024, cut in half the amount that borrowers have 

to pay each month from 10% to 5% of discretionary income.

• Raise the amount of income that is considered non-discretionary income and therefore is 

protected from repayment, guaranteeing that no borrower earning under 225% of the 

federal poverty level—about the annual equivalent of a $15 minimum wage for a single 

borrower—will have to make a monthly payment under this plan.

• Forgive loan balances after 10 years of payments, instead of 20 years, for borrowers 

with original loan balances of $12,000 or less. The Department estimates that this reform 

will allow nearly all community college borrowers to be debt-free within 10 years.

• Not charge borrowers with unpaid monthly interest, so that unlike other existing incomedriven repayment plans, no borrower’s loan balance will grow as long as they make their 

monthly payments—even when that monthly payment is $0 because their income is low.
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

7 

All student borrowers in repayment will be eligible to enroll in the SAVE plan. Borrowers who 

sign up or are already signed up for the current REPAYE plan will be automatically enrolled in 

SAVE once the new plan is implemented.

Repayment Plans

Key 

Features Standard Graduated Extended ICR IncomeBased

New

IncomeBasedPAYE SAVE 

Eligibility

All Direct

and FFEL 

loans

All Direct

and FFEL 

loans

Direct or 

FFEL 

borrowers

w/$30,000

or more

in 

outstanding 

student

loans

All Direct

loans except 

for nonConsolidated 

Parent PLUS

Incomeeligible

student 

borrowers

[loans

issued 

before

7-1-2014]1

Incomeeligible

student 

borrowers

[loans

issued 

7-1-2014

or later]1

Incomeeligible

student 

borrowers

[loans

issued 

10-1-2011

or later] 1

All Direct 

Loan

student 

borrowers

Monthly 

payment

Remains 

fixed

Increases 

over time

Fixed or 

increases 

over time

20% of 

borrower’s 

discretionary income; 

max pay is 

12-yr fixed2

15% of 

borrower’s 

discretionary income; 

max pay is 

10-yr fixed2

10% of 

borrower’s 

discretionary income; 

max pay is 

10-yr fixed2

10% of 

borrower’s 

discretionary income; 

max pay is 

10-yr fixed2 

10% of 

borrower’s 

discretionary income2

Remaining 

balance 

forgiven 

after 

repayment 

period 

complete?

No No No Yes Yes Yes Yes Yes

Repayment

terms

(in years)

10 10 up to 25 25 25 20 20 10 to 25

NOTES: Standard, Graduated, and Extended plans are fully repaid at the end of term. Only Direct Loans may be 

repaid under ICR, PAYE, and SAVE plans. However, FFEL Program loans that are consolidated into a Direct

Consolidation Loan are, for the most part, eligible to be repaid under ICR, PAYE, and SAVE, with the exception of 

Parent PLUS loans that are only allowed into ICR.

Analysis of Borrower Obligations and Loan Payments in IDR Plans

The Department is fully supportive of recommendations by Congressional staff, the Government 

Accountability Office (GAO), the Office of Inspector General, and other policymakers to publish 

1 Generally, plans such as Income-Based and PAYE are available to qualified borrowers who demonstrate a partial 

financial hardship. A partial financial hardship occurs when the monthly payment amount a borrower would otherwise 

have to make for 10 years under the standard repayment plan is more than the monthly payment under this plan.

2 In ICR, discretionary income is defined as the difference between the borrower’s annual income and 100 percent of 

the poverty guideline for their family size and state of residence. In all other IDR plans, discretionary income is the 

difference between the borrower’s annual income and 150 percent of the poverty guideline for their family size and 

state of residence.
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

8 

more detailed cost information on Income-Driven Repayment. As a result of earlier efforts by the 

Department to advertise the SAVE and PAYE programs and encourage borrowers to enroll in 

them, many more borrowers are electing to repay their loans on IDR plans. Given this trend, the 

Department conducted a series of sensitivity analyses on incomes for students in IDR, including 

students pursuing Public Service Loan Forgiveness (PSLF). Supplemental information on IDR 

costs were published in the fiscal year 2023 Agency Financial Report.1

The Department’s analysis illustrates how uncertainty around key assumptions can lead to 

significant variance in cohort subsidy cost estimates. For example, a 5 percent increase in 

estimated borrower income would decrease costs by almost $1.12 billion for loans originated in 

fiscal year 2022 (i.e., the fiscal year 2022 loan cohort), while a 5 percent decrease in estimated 

borrower income would increase costs by $1.14 billion. A 5 percent increase in estimated PSLF 

plan participation would increase costs by $199 million for the same cohort of loans, while a 

5 percent decrease would decrease costs by $207 million. 

The following analysis provides insight into how borrower payments, a foundational driver of 

student loan program costs, vary significantly depending on levels of borrower income and debt. 

This analysis provides another helpful approach for examining IDR by showing how different 

borrowers are affected by the formulas that determine the monthly payment. 

Estimated Ratio of Loan Payment Totals to Initial Principal Balance for

Income-Driven Repayment

Borrowers Entering Repayment in Fiscal Year 2025

Debt Range Income <= $85,000 Income $85,000-$135,000 Income > $135,000

<= $30,000 0.29 — —

> $30,000 0.26 — —

<= $52,000 — 0.62 —

> $52,000 — 0.59 —

<= $94,000 — — 1.01

> $94,000 — — 1.08

For comparison purposes, the table analyzes the projected payments, assuming completion of 

the expected repayment period, under IDR plans for all borrowers projected to enter repayment 

and enroll in IDR in fiscal year 2025. Student borrowers will choose repayment plans given their 

circumstances, and overall participation in IDR plans will depend on the terms of the IDR plans 

available at a given time. 

The projection of borrower payments is based on the repayment plan assigned in the model 

(ICR, Pre-2014 IBR, PAYE, SAVE, with PAYE and the Post-2014 IBR combined since they are 

very similar). When the model assigns plans, it assumes that borrowers will choose a plan with 

the best net present value over the repayment period. For fiscal year 2025, approximately 93.5 

percent of borrowers entering repayment in an IDR plan are expected to choose SAVE and 5.5 

percent are expected to choose PAYE. The remaining borrowers are expected to choose other 

plans. Future incomes are inflated for the life of the loan, with income categories defined 

according to a borrower’s average projected income throughout the full repayment period. 

1 Supplemental information on IDR costs are available on the Department’s website: 

https://www2.ed.gov/about/overview/budget/tables.html.

 
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

9 

From the borrowers’ perspective, lower ratios as shown in the table above usually indicate more 

advantageous plans. However, the wide variation of ratios by income category illustrates the 

complicated trade-offs borrowers face when considering the payments required and the length 

of time that payments must be made. 

To better understand the ratios in the table, the following example may be helpful. For every 

$10,000 of loans borrowed, borrowers represented by the first category (where annual income 

is less than or equal to $85,000 and where student loan debt is less than or equal to $30,000) 

would pay $2,900 over their entire repayment period under IDR. The ratio of total borrower 

payments to initial principal balance is not the same as the budgetary costs to the Government, 

which are determined by the net present value of repayment cash flows.

Loan Forgiveness1

Estimates of forgiveness under the current IDR plans for borrowers entering repayment in 

2025—combined across all IDR plans, since borrowers can switch between IDR plans—assume 

about 6.5 percent of borrowers would pay their loans off in full; 14 percent would end up not 

completing their repayment term due to prepayment in full; 15 percent would end up not 

completing their repayment term due to default; 13 percent would end up not completing their 

repayment term due to loan discharge (e.g., total and permanent disability); 33.5 percent would 

complete their repayment term and receive IDR forgiveness; and 18 percent would qualify for 

PSLF. 

 

Of those student borrowers whose balances are projected to receive IDR forgiveness, about 

77 percent would have an amount forgiven less than or equal to their original balance. The 

median original amount borrowed for those who would qualify for non-PSLF IDR forgiveness is 

$53,000, and the median amount forgiven is $40,000. The original median balance for 

borrowers who would qualify for PSLF is $71,000, and the median amount forgiven under PSLF 

is $65,000. 

Under both the FFEL and Direct Loan programs, new borrowers after October 1, 1998, who are 

employed as teachers in schools serving low-income populations for 5 consecutive, complete 

school years qualify for up to $5,000 in teacher loan forgiveness. This benefit is increased to 

$17,500 for mathematics, science, and special education teachers considered highly qualified 

under criteria defined in section 9101 of the Elementary and Secondary Education Act of 1965, 

as amended. 

The American Rescue Plan Act of 2021 (P.L. 117-02) included a provision that exempts from 

taxation Federal student loan debt that is forgiven between December 31, 2020, and January 1, 

2026. 

On April 19, 2022, the Department announced several actions that will bring borrowers closer to 

forgiveness under IDR and/or PSLF. These include a one-time adjustment to the number of 

qualifying payments for borrowers and permanently fixing payment counting by reforming 

payment tracking procedures going forward. 

1 Analysis in this section reflects assumptions used to calculate the fiscal year 2024 baseline for program cost 

estimates under current law. 
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

10

As of December 31, 2023, the total number of borrowers who received forgiveness from the 

account adjustment was 900,800. The value of this forgiveness totaled nearly $44.0 billion. The 

Department continues to identify borrowers eligible for forgiveness and expects to complete the 

full adjustment by July 1, 2024

Public Service Loan Forgiveness

In 2007, CCRAA authorized the PSLF program for nonprofit and public-sector employees. The 

criteria for defining a “public service organization” is broad and covers any Federal, State, or 

local government organization or agency and most charitable non-profit organizations. In 

addition, non-profit employers include most private schools, colleges, and universities and other 

employers with a 501(c)(3) Internal Revenue Service designation. To qualify for PSLF, 

borrowers must work for an organization that meets the PSLF employer eligibility requirements. 

Borrowers must make 120 qualifying monthly payments while working full-time for an eligible 

public service organization, but payments do not have to be consecutive. Borrowers who make 

120 qualifying payments under the 10-year standard repayment plan or under any Direct Loan 

Income-Driven Repayment plan, or any combination of the 10-year standard plan and any 

Direct Loan income-driven plan, will have any remaining loan balance forgiven. Amounts 

forgiven under PSLF are exempt from taxation. The PSLF benefit is only available in the Direct 

Loan program, though FFEL borrowers may access the PSLF program by consolidating their 

FFEL program loan into a Direct Consolidation Loan and subsequently making 120 qualifying 

payments. 

The Consolidated Appropriations Act, 2018 (P.L. 115-141) and the Department of Defense and 

Labor, Health and Human Services, and Education Appropriations Act, 2019 (P.L. 115-245)

each provided $350 million in funding to provide loan forgiveness in situations where borrowers 

were denied PSLF only because some or all of their repayments were not made via a qualifying

repayment plan. The Further Consolidated Appropriations Act, 2020 (P.L. 116-94) and 

Consolidated Appropriations Act, 2021, (P.L. 116-260) each provided an additional $50 million. 

This limited opportunity is referred to as the Temporary Expanded Public Service Loan 

Forgiveness (TEPSLF) program. The program operates on a first come, first served basis. 

Funds are available until expended. As in PSLF, borrowers must make 120 qualifying monthly 

payments while working full time for an eligible public service organization. 

TEPSLF is only available to Direct Loan borrowers who otherwise meet all the other qualifying 

criteria for PSLF except the eligible repayment plans. The expanded list of repayment plans 

under TEPSLF includes Graduated and Extended Repayment plans, Consolidation Standard, 

and Consolidation Graduated plans. 

On October 6, 2021, the Department announced a pandemic-related waiver to the Public 

Service Loan Forgiveness program requirements. The time-limited waiver impacted student 

loan borrowers with Direct Loans, those who have already consolidated into the Direct Loan 

Program, and those who consolidate into the Direct Loan Program by October 31, 2022. Under 

the new temporary rules, any prior period of repayment counts as a qualifying payment, 

regardless of loan program, repayment plan, or whether the payment was made in full or on 

time.
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

11

The first cohort of borrowers became eligible for PSLF discharge in October 2017. As of 

January 31, 2024, the total number of borrowers who received forgiveness from the PSLF 

waiver was 730,000. The value of this forgiveness totaled $50.5 billion. When including the 

TEPSLF and PSLF categories of discharges, the value of forgiveness exceeded $58.2 billion 

and included 812,000 borrowers.

On October 31, 2022, the Department announced final regulations that streamline and improve 

the rules for major targeted debt relief programs, including PSLF. The new PSLF regulations 

and one-time account adjustment have delivered many significant benefits to PSLF applicants 

and borrowers enrolled in IDR plans by addressing past servicing problems and improving the 

PSLF rules that previously excluded certain borrowers from forgiveness.

Interest Rates and Loan Limits—By Type of Loan

Since 1965, interest rates on Federal student loans have been set in statute. For many years, 

the statute set the terms at fixed or variable rates reset annually. Starting July 1, 2006, as 

specified by amendments to the Higher Education Act passed on February 8, 2002, under P.L. 

107-139, the rate on all Subsidized and Unsubsidized Stafford loans was fixed at 6.8 percent, 

while the borrower interest rate on Direct PLUS loans was fixed at 7.9 percent.

The College Cost Reduction and Access Act of 2007 included an annual phased interest rate 

reduction for all new undergraduate Subsidized Stafford loans, with fixed interest rates dropping 

from 6.8 percent to 6 percent on July 1, 2008, until reaching 3.4 percent on July 1, 2011. The 

Moving Ahead for Progress in the 21st Century Act (P.L. 112-141), signed July 6, 2012, 

extended the Subsidized Stafford interest rate of 3.4 percent for 1 year.

The Bipartisan Student Loan Certainty Act of 2013, signed on August 9, 2013, established a 

market-based system tying student loan interest rates to the high-yield 10-year Treasury bill 

plus a statutorily-set basis point add-on up to a statutory cap. Interest rates for each loan type 

are set annually before the award year begins on July 1 but are fixed for the life of the loan, 

similar to fixed-rate home mortgages. The 10-year Treasury rate is determined each year at the 

Treasury bill auction held prior to June 1. The interest rates for academic year 2023-2024 were 

set in June 2023. 

On October 31, 2022, the Department announced final regulations that will help borrowers avoid 

spiraling student loan balances by eliminating all instances of interest capitalization not required 

by statute. Interest capitalization events cause unpaid interest to be added to a borrower’s 

principal balance, increasing monthly interest accrual going forward and, in many cases, the 

total amount that borrowers have to pay.

Summaries of each loan type follow:

• Subsidized Stafford (Stafford) Loans are low-interest, fixed-rate loans with annual and 

aggregate loan limits for eligible undergraduates who meet financial need criteria. The 

Budget Control Act of 2011 eliminated graduate and professional student eligibility for these 

loans effective July 1, 2012. The interest rate is set annually, remains fixed for the life of the 

loan, and is capped at 8.25 percent. Loans disbursed on or after July 1, 2023, and before 
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

12

July 1, 2024, (academic year 2023-2024) will have an interest rate of 5.50 percent, based on 

the 10-year Treasury rate of 3.45 percent plus a statutory add-on of 2.05 percent. The 

Government pays the interest while the student is in school or deferment. 

• Unsubsidized Stafford Loans are low-interest, fixed-rate loans available to student 

borrowers, regardless of financial need, with annual and aggregate loan limits. Interest 

accrues while the borrower is in school. Borrowers may defer payment of interest while in 

school and have the interest capitalized—added to the loan principal—upon entering 

repayment. New Unsubsidized Stafford Loans to undergraduates have the same rate and 

cap as Subsidized Stafford Loans (5.50 percent). However, the interest rate for graduate 

students has an add-on of 3.60 percent and a 9.5 percent cap. For academic year 2023-

2024, the rate for graduate students is 7.05 percent, based on the 3.60 add-on and 10-year 

Treasury note of 3.45 percent. 

• PLUS Loans are available to parents of dependent undergraduate students and to graduate 

and professional degree students. There is no annual or aggregate limit on the amount that 

can be borrowed other than the cost of attendance minus other student financial aid. 

Generally, applicants must not have an adverse credit history. The Government does not 

pay interest accruing on PLUS Loans. The interest rate for new loans first disbursed on or 

after July 1, 2023, and before July 1, 2024, is 8.05 percent, based on the 10-year Treasury 

note of 3.45 percent and an add-on of 4.60 percent. The PLUS rate cap is 10.5 percent. 

• Consolidation Loans allow borrowers with existing Federal student loans to combine their 

loans and possibly extend their repayment schedules based on their total student loan debt 

outstanding. In general, to consolidate loans in the Direct Loan program, a borrower must 

have an outstanding principal balance on at least one eligible loan made under either the 

FFEL or Direct Loan program. Loans such as Subsidized Stafford, Unsubsidized Stafford, 

PLUS, and sometimes other Consolidation Loans are eligible. In addition, other Federal 

student loans from different programs are also eligible such as Federal Perkins Loans, 

Federal Insured Student Loans, National Defense Student Loans, Health Education 

Assistance Loans, and Nursing Loans. The interest rate for Consolidation Loans is equal to 

the weighted average of the interest rates on the loans consolidated rounded to the nearest 

higher one-eighth of 1 percent, which is then fixed for the life of the loan. The Bipartisan 

Student Loan Certainty Act of 2013 eliminated the cap of 8.25 percent.
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

13

Borrower Interest Rates by Academic Year and Program Component

Type of Loan

Loans made on or after 

Oct. 1, 19981

Loans made on or after 

July 1, 20062

Loans made on or after 

July 1, 20133

Stafford and 

Unsubsidized 

Stafford 

91-day Treasury bill rate 

+1.7%, during in-school, 

grace, or deferment 

periods, but T-bill +2.3% 

during repayment; not to 

exceed 8.25%.

Both types: 6.8%; only 

subsidized Stafford loans 

reduced:

6.0%--2008-2009

5.6%--2009-2010

4.5%--2010-2011

3.4%--2011-2012

3.4%--2012-2013

Undergrads: [Sub and 

Unsub] 10-yr. Treasury 

note + 2.05%, w/cap of 

8.25%;

Grads: [Unsub] 10-yr 

Treasury note + 3.6%; 

w/cap of 9.5% 

PLUS 91-day Treasury bill rate 

+3.1%, not to exceed 9%.

Fixed rate of 7.9% for 

Direct PLUS;

increased to 8.5% under 

HERA for FFEL PLUS.

Grad and parent: 10-yr 

Treasury note + 4.6%, 

w/cap of 10.5%.

FFEL 

Consolidation 

Loans4

Weighted average of the 

interest rates on the 

loans consolidated, 

rounded up to the 

nearest one-eighth of 

1 percent, not to exceed 

8.25%.

Weighted average of the 

interest rates on the 

loans consolidated, 

rounded up to the 

nearest one-eighth of 

1 percent, not to exceed 

8.25%.

N/A 

Direct 

Consolidation 

Loans -- Stafford 

and 

Unsubsidized 

Stafford 

91-day T-bill rate +2.3%, 

not to exceed 8.25% for 

applications received 10-

1-98 through 1-31-99; 

weighted average basis, 

as above, thereafter.

Weighted average basis, 

as above.

Weighted average of the 

interest rates on the 

loans consolidated, 

rounded to the nearest 

higher one-eighth of 

1 percent.

Direct PLUS 

Consolidation 

Same as Direct 

Consolidation Loans for 

Stafford and

Unsubsidized Stafford. 

Same as Direct 

Consolidation Loans for 

Stafford and 

Unsubsidized Stafford. 

Same as Direct 

Consolidation Loans for 

Stafford and 

Unsubsidized Stafford. 

1 The Transportation Equity Act for the 21st Century lowered interest rates for new Stafford, Unsubsidized Stafford, 

and PLUS loans made on or after July 1, 1998, and before October 1, 1998. These rates were extended under the 

HEA of 1998 to July 1, 2003, and further extended to July 1, 2006, via P.L 107-139. 2 Interest rates from CCRAA of 2007 (P.L. 110-84). 3 Interest rates from the Bipartisan Student Loan Certainty Act of 2013 (P.L. 113-28). 4 The Emergency Student Loan Consolidation Act of 1997, which was included in the Department’s fiscal year 1998 

appropriation, temporarily changed a number of laws affecting Consolidation Loans. Under this Act, which expired 

September 30, 1998, the interest rate for FFEL Consolidation Loans made on or after November 13, 1997, was 

based on the 91 Day Treasury-bill + 3.1 percent, not the weighted average of the interest rates on the loans 

consolidated. SAFRA eliminated new FFEL Loans as of July 1, 2010.
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

14

Student Loan Program Maximums

(Whole dollars)

STUDENT STATUS

STAFFORD 

(Subsidized)

TOTAL (Stafford & 

Unsubsidized Stafford)1,2

DEPENDENT 

UNDERGRADUATES Annual Limits Annual Limits

Dependent Undergraduates: First-Year Student $3,500 $5,5003

Dependent Undergraduates Second-Year Student 4,500 6,5003

Dependent Undergraduates Third-Year+ Student 5,500 7,5003

INDEPENDENT 

UNDERGRADUATES4 Stafford Total (Stafford & 

Unsubsidized Stafford)

Independent Undergraduates: First-Year Student $3,500 $9,5003

Independent Undergraduates: Second-Year Student 4,500 10,5003

Independent Undergraduates: Third-Year+ Student 5,500 12,5003

GRADUATE STUDENTS5 0 $20,500 

STUDENT STATUS Aggregate Limits Aggregate Limits

DEPENDENT 

UNDERGRADUATES

$23,000 $31,0003

INDEPENDENT 

UNDERGRADUATES4

23,000 57,5003

GRADUATE STUDENTS5 23,000 138,500 

1 Students who qualify for only a portion of the maximum Stafford Loan limit may borrow up to the remaining loan 

amount under the Unsubsidized Stafford Loan program, with the total amount borrowed limited to cost of attendance 

minus other aid. For example, a dependent first-year student who qualifies for a $2,000 Stafford Loan would be 

eligible for an additional $3,500 in Unsubsidized Stafford up to the total of $5,500. For students borrowing under both 

programs, the loan limits displayed above in the Total (Stafford and Unsubsidized Stafford) column apply.

2 For independent undergraduate students (or dependent undergraduate students whose parents cannot borrow 

under the PLUS program) and for graduate students, the maximum limit during any academic year is: the combined 

Stafford and Unsubsidized Stafford Loan limit shown under the column entitled, "Total (Stafford and Unsubsidized 

Stafford)." For example, a second-year independent student could borrow up to $4,500 in Stafford Loans and up to 

an additional $6,000 in Unsub. Loans for a total of $10,500. 

3 ECASLA of 2008 increased Unsubsidized Stafford amounts by $2,000 annually for loans first disbursed on or after 

July 1, 2008. Aggregate amounts for dependent undergraduates increased by $8,000 and for independent 

undergraduates by $11,500. Graduate student levels did not change.

4 Also includes dependent undergraduates whose parents are unable to borrow under the PLUS program.

5 As of July 1, 2012, graduate and professional students are not eligible for Stafford Loans. Total Stafford Aggregate 

Limit of $23,000 reflects the maximum undergraduate amount, which is included in the graduate level cumulative 

limit. The aggregate loan limit for graduate students is regulated by the Department. As a result of HERA, qualified 

graduate and professional students are also eligible to borrow PLUS loans, where the only limit is the cost of 

attendance minus other student aid as described above.
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

15

Credit Reform Estimates

Student loan program costs are estimated consistent with the terms of the Federal Credit 

Reform Act (FCRA) of 1990. Under the Act, future cash flows, meaning costs and revenues 

associated with a loan, are estimated for the life of the loan and discounted back to the date of 

disbursement using Treasury interest rates. This set of interest rates, provided by OMB, (i.e., 

the discount rate) is used to calculate the present value of the cash flows, which also 

determines Federal borrowing costs.

Federal loan programs are often compared using subsidy rates, which represent the Federal 

cost as a percentage of loan originations. Generally, subsidy costs may reflect a combination of 

positive and negative subsidy by loan type, with the relative weightings by loan type and other 

accounting rules determining the overall net positive or negative subsidy. A negative subsidy 

occurs when the present value of cash inflows to the Government is estimated to exceed the 

present value of cash outflows. Under Federal Credit Reform Act rules, costs such as defaults 

and in-school interest benefits are embedded within the program subsidy, while Federal 

administration costs are treated on a cash basis and are not included in the subsidy rate.

Both the FFEL and Direct Loan programs are funded by mandatory and indefinite budget 

authority and, therefore, do not receive annual discretionary appropriations. Both programs also 

incur various administrative expenses, the greatest historically being loan servicing, that are 

funded by the discretionary Student Aid Administration (SAA) account. In fiscal year 2025, the 

Administration requests $2.659 billion in SAA funding to administer all Title IV Federal student 

aid programs. This includes $1.484 billion for student aid salaries and expenses and 

$1.175 million for loan servicing activities. The fiscal year 2025 SAA budget request is 

discussed in the Student Aid Administration account. 

A subsidy rate is the Federal portion of non-administrative costs—principally interest subsidies 

and defaults—associated with each dollar originated. The subsidy rate reflects the estimated 

unit cost per loan, over the life of the loan, to the Federal Government. For example, a $1,000 

loan with Federal subsidy costs of $100 would have a subsidy rate of 10 percent. If loan subsidy 

costs were negative, such as -$100, then the loan has a negative subsidy rate of -10 percent, 

indicating that the Federal Government was receiving, rather than spending, 10 percent on each 

dollar of loans made. Program changes, economic conditions, and borrower repayment patterns 

can affect subsidy estimates and reestimates.

Annual variations in the subsidy rate are largely due to the relationship between the OMBprovided discount rate, which approximates the Government’s borrowing rate; the interest rate 

at which borrowers repay their loans; and technical assumptions for defaults, repayment 

patterns, repayment plan selection, and other borrower characteristics. The loan subsidy 

estimates are particularly sensitive to fluctuations in the discount rate. Even small shifts in 

economic projections may produce substantial changes in the subsidy rate. 

In the current fiscal year 2024, the Direct Loan program had an estimated net positive subsidy – 

driven in part by rising enrollment in IDR plans. In fiscal year 2024, the Direct Loan program 

weighted average subsidy rate for new and Consolidation Loans was estimated at 

22.87 percent. 
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

16

However, subsidy rates can vary significantly by loan types. For example, in fiscal year 2024, 

Subsidized Stafford Loans, at 26.22 percent, and Consolidation Loans, at 42.19 percent, had 

estimated positive subsidy rates, indicating a cost to the Government. Unsubsidized Stafford 

loans for undergraduates, at 17.46 percent, Unsubsidized Stafford loans for graduates, at

21.69 percent, and PLUS loans for graduate students, at 19.34 percent, also reflected positive 

subsidy rates. PLUS loans for parents (which are not eligible for enrollment in most IDR plans)

had estimated negative subsidy rates, reflecting a savings to the Government, at -

26.20 percent. 

Subsidy rates can also vary by repayment option, with the greatest differences appearing 

between costlier IDR plans and other plans such as Standard, Extended, and Graduated. For 

example, in fiscal year 2024, the cohort of Subsidized Stafford loans showed an estimated 

subsidy rate of 13.17 percent under Standard (ten-year repayment), compared to a subsidy rate 

of 60.68 percent under all IDR plans. Unsubsidized Stafford loans (both undergraduate and 

graduate) showed a subsidy rate of -3.51 percent under Standard repayment compared to 

53.11 percent under IDR. 

Outstanding Loan Levels

Based on the budget tables published in the 2025 Budget Appendix, at the end of fiscal year 

2023 the outstanding FFEL and Direct Loan principal is estimated at approximately 

$1.495 trillion: 

According to the Federal Student Aid Data Center quarterly reports, at the end of fiscal year 

2023 the outstanding FFEL and Direct Loan principal and interest balance is $1.599 trillion. 

1,336

118 3 38

Outstanding Loan Levels (Principal in $B): FY 2023

Direct Loans

FFEL

FFEL Liquidating

ECASLA
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

17

Reestimates of Subsidy Costs

Under the Federal Credit Reform Act (FCRA), the Department is required to annually reestimate 

the cost of outstanding loans by cohort since fiscal year 1992 to reflect updated modeling 

assumptions, the President’s Budget economic assumptions, and historical loan performance. 

For the $1.336 trillion in Direct Loan principal outstanding at the end of fiscal year 2023, the 

Administration’s fiscal year 2025 budget calculates that net future Federal costs of outstanding 

loans are higher than projected in the fiscal year 2024 request; this difference is reflected in the 

2024 reestimate. The 2024 net upward reestimate of $64.2 billion reflects an upward component 

of about +$65.8 billion and a downward component of about -$1.6 billion. The net upward 

reestimate is due primarily to loan discharge assumption updates. During fiscal year 2023, the 

Department completed included a standard data update with data from the National Student 

Loan Data System (NSLDS), including an update to closed school discharges and PSLF waiver 

discharges to reflect the significant recent increases in discharges. Further revisions or 

simplifications to model adjustments for recent regulations are expected in upcoming cycles as 

more discharges are processed and are reflected in the data. Additional significant drivers of the 

net upward reestimate include updates to the collections on defaulted loan and discount rate

assumptions. This net reestimate represents about 4.8 percent of the total Direct Loan 

outstanding portfolio.

Similarly, the total change in costs for all outstanding FFEL program loans at the end of fiscal 

year 2023—starting with guaranteed loans made as of October 1, 1992—is the 2024 

reestimate. The 2024 FFEL guaranteed loan reestimate reflects an upward component of 

+$7.0 billion, with a downward component of about -$2.3 billion, for a total net upward 

reestimate of +$4.7 billion. Thus, the estimated Federal cost of prior FFEL program loans is 

higher by about $4.7 billion than previously projected. The FFEL 2024 upward reestimate was 

due primarily to updated default and collections on defaulted loan rates. The ECASLA programs 

show a net upward reestimate of +$4.9 billion, which when combined with the FFEL portion of 

$4.7 billion produces an overall net upward FFEL reestimate of +$9.6 billion in fiscal year 2024, 

representing about 6.2 percent of the overall FFEL portfolio. The net upward reestimates in 

these programs were due primarily to loan discharge assumption updates. The reestimates in 

those programs include financing account interest adjustments to address differences between 

net financing account interest executed for cohorts each year and amounts earned based on 

final Treasury interest rates for those cohorts.

The Chief Financial Officers Act of 1990 requires the Inspector General to audit the 

Department’s financial statements each year, which is intended to help improve an agency’s 

financial management and controls over financial reporting. In fiscal year 2023, the independent 

auditor issued a disclaimer of opinion as it was not able to obtain sufficient appropriate audit 

evidence to provide a basis for an audit opinion because of unresolved errors identified in the 

underlying data used to calculate the subsidy reestimates for the Department’s direct loan and 

loan guaranty programs. The underlying data was not updated for the 2024 reestimates. A new 

data file will be used for the fiscal year 2024 financial statements.
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

18

Total net FFEL and Direct Loan subsidy budget authority costs1 for the past 5 fiscal years are 

shown below (dollars in thousands):

Fiscal Year FFEL Direct Loans

2020 $9,734,183 $109,669,910

2021 9,304,404 124,111,109

2022 34,350,479 447,084,131

2023 -2,539,373 -185,185,686

2024 9,637,242 97,146,640

FY 2025 BUDGET PROPOSAL

The Administration looks forward to working with Congress to develop and enact reforms that 

make the administration of student loans more effective and efficient. The fiscal year 2025

President’s budget proposes to eliminate origination fees. Origination fees were originally 

created to offset the costs cost of banks and private institutions providing federally guaranteed 

and subsidized of federal student loans in the FFEL program. The FFEL program ended in 

2010, eliminating the need for an origination fee to offset those costs. The origination fee is set 

at a percentage of the loan that is deducted from the amount received by the borrower. 

Borrowers are expected to pay back the full borrowed amount inclusive of the origination fee, 

rather than the amount they actually received, with interest. Eliminating these fees would be a 

step in the direction of lowering the cost of higher education.

Additionally, the Administration intends to work with Congress to ensure access to student 

financial aid for students who are Dreamers. 

FY 2025 ESTIMATED NEW DIRECT LOAN VOLUME

New Direct Loan dollar volume increased significantly from 2007 to 2011 as the financial crisis 

drove many non-traditional students to seek higher education. However, from 2011 to 2018, as 

the economy recovered, loan volume declined. Disruption in the traditional brick and mortar 

delivery of higher education during the COVID-19 pandemic depressed loan volume and 

affected the mix of volume among loan types. Consistent with long-term student loan trends, the 

fiscal year 2025 budget estimates a modest increase in total loan volume. Subsidized and 

Unsubsidized Stafford Loans are projected to account for about 69 percent of new Direct Loan 

volume in fiscal year 2025, with PLUS loans at 31 percent. Graduate school loan volume is 

estimated to increase 11 percent between 2020 and 2025, accounting for 45 percent of new 

volume in fiscal year 2020 and 46 percent in fiscal year 2025. It is still uncertain whether effects 

on enrollment due to the pandemic are temporary or more of a permanent trend. The table 

below includes loan volume disbursed through fiscal year 2025. 

1 Subsidy costs include net reestimates (combined upward and downward) of prior cohorts and net modifications, 

which may produce significant annual fluctuations. The Direct Loan total in fiscal year 2024 is primarily due to a net 

upward reestimate of $64.2 billion.
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

19

New Student Loan Volume (Non-Consolidation)1

(dollars in Millions)

Program Volume FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025

Subsidized Stafford $17,050 $16,192 $15,205 $16,329 $16,867 $16,995

Unsubsidized Stafford 46,366 45,596 44,160 45,555 47,229 47,672

PLUS 21,576 22,673 23,754 26,498 27,484 28,433

Total New Loan Volume 84,992 84,461 83,119 88,382 91,580 93,100

Graduate School Portion 38,643 39,554 38,834 41,268 42,442 43,051

Many factors—including rising college costs, legislative changes, eligibility changes, availability 

of State aid, availability of Federal aid, economic conditions, and enrollment demographics—

affect new loan demand. Historical loan volume data and current projections are shown above. 

FY 2025 ESTIMATED CONSOLIDATION LOAN VOLUME

Direct Loan Consolidation volume surged from about $35 billion in fiscal year 2014 to $49 billion 

in fiscal year 2017 but has since declined. The increase from 2014 through 2017 may have 

resulted from greater marketing and outreach on the part of additional Consolidation Loan 

servicers brought under contract in July 2014, although increased borrowing in fiscal years 

2009-2011 and higher borrower loan balances could also be contributing factors. In 2021, 

Consolidation volume showed a marked decline, as most borrowers took advantage of 

provisions of the extensions to the CARES Act and opted against making voluntary principal 

payments. In 2022 and 2023, Consolidation volume surged again as loan consolidation was a 

necessary step for many borrowers to apply for the time-limited PSLF waiver.

1 Loan volume reflects net commitments. Figures for fiscal years 2024 and 2025 are baseline estimates. 

0

20

40

60

80

100

120

'92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 18 20 22 24

$ (Billions)

Fiscal Year

New Student Loan Volume (Non-Consolidation)
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

20

The 2012 surge was due to a special six-month incentive repayment program, where borrowers 

who had both a FFEL and a Direct Loan were offered an additional 0.25 percent interest rate 

reduction to consolidate their loans under this special program. Repayment incentives also 

included the regular 0.25 percent interest rate reduction for electronic payment.

Until the passage of HERA in 2005, married couples were allowed to borrow a Consolidation 

Loan as joint borrowers. In HERA, Congress eliminated the authority to jointly borrow a 

consolidation loan but did not provide existing borrowers any way to separate their loans. The 

Joint Consolidation Loan Separation Act (P.L. 117-200) allowed joint consolidation loan 

borrowers to separate their joint loan obligation into separate individual Direct Consolidation 

Loans for the first time. The joint consolidation loan remainder – the unpaid loan and accrued 

unpaid interest – will be split proportionally based on the percentages that each borrower 

originally brought into the loan. The two new Direct Consolidation Loans will have the same 

interest rates as the joint consolidation loan. This process will enable joint FFEL Consolidation 

Loan borrowers to access student loan relief programs, such as the PSLF, for which they were 

previously ineligible. 

THE ROLE OF STUDENT LOANS

Federal student loans play a key role, along with Federal grants and Federal education tax 

credits, in helping families access and afford postsecondary education. The following charts 

show that Federal student loans are the largest component of the Federal postsecondary aid 

system. Federal student loans (excluding Consolidation loans) accounted for about 63 percent 

of academic year 2022-2023 Federal student aid, while Federal grants, including the Post-9/11 

Veterans Educational Assistance Program and Federal Work Study, accounted for 

approximately 29 percent. Federal tax benefits accounted for 8 percent. This breakout is based 

on data from Table 1 in the “College Board Trends in College Pricing and Student Aid 2023” 

online report.1

1 See Table 1, https://research.collegeboard.org/trends/college-pricing. 

0

10

20

30

40

50

60

70

80

'93'94'95'96'97'98'99'00'01'02'03'04'05'06'07'08'09'10'11'12'13'14'15'16'17 18 19 20 21 22 23 24 25

Volume: $ Billions

Fiscal Year

Consolidation Loan Volume

FFEL

Direct Loans
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

21

Federal Postsecondary Assistance: Academic Year 2022-2023 

According to this report, approximately $241 billion in total funds from Federal, State, 

institutional, and private sources were used to help finance postsecondary expenses for

academic year 2022-2023. The Federal Government provided about $133 billion, or 55 percent, 

of all these funds, while State, institutional, and private sources (i.e., non-Federal) provided 

about 45 percent. The chart below shows the historical trend for major Federal aid programs 

over the past fifteen years based on data in the 2023 College Board online report.

Federal student 

loans

63% Federal grants 

and work-study 

29%

Federal 

education tax 

credits

8%

0

20

40

60

80

100

120

140

160

180

200

220

08-09 09-10 10-11 11-12 12-13 13-14 14-15 15-16 16-17 17-18 18-19 19-20 20-21 21-22 22-23

Aid: $ Billions

Academic Year

Federal Aid AY 08-09 to 22-23

Pell Grants Federal Loans Federal Work Study

Federal Education Tax Benefits Veterans and Military Grants
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

22

The chart below shows the same historical trend for both total federal aid and other major 

sources of student aid based on College Board data. 

POSTSECONDARY STUDENT COST, BORROWING, AND ENROLLMENT 

BY INSTITUTIONAL SECTOR

The 2023 “College Board Trends in College Pricing” online report shows that the average 

annual total cost of attendance, including tuition and fees and room and board (in current 

dollars), at a public 4-year college, increased by 31 percent from $18,380 in 2013-2014, to 

$24,030 in 2023-2024.1 Over the same 10-year period, the average yearly total cost at a private 

4-year college increased by 37 percent, from $40,960 to $56,190. Using just tuition and fees 

shows that public 4-year schools increased from $8,890 in 2013-2014 to $11,260 in 2023-2024, 

a 27 percent increase, while private 4-year schools increased from $30,130 to $41,540, a 38 

percent increase. Tuition and fees—there is no room and board—at public 2-year community 

colleges increased from $3,240 in 2013-2014 to $3,990 in 2023-2024, a 23 percent increase, 

but a much lower overall cost. 

Students rely on the Federal loan programs to help close the gap between what they or their 

families are expected to pay (“expected family contribution”) and the cost of attendance 

(including tuition, fees, and room and board). Using undergraduate enrollment data from the 

Department’s Integrated Postsecondary Education Data System (IPEDS), the College Board’s 

2023 “Trends in Student Aid” report estimates student full-time equivalency (FTE) patterns, 

1 See Table 2, https://trends.collegeboard.org/college-pricing. 

0

50

100

150

200

250

300

350

08-09 09-10 10-11 11-12 12-13 13-14 14-15 15-16 16-17 17-18 18-19 19-20 20-21 21-22 22-23

Aid: $ Billions

Academic Year

Total Student Aid AY 08-09 to 22-23

Total Federal Aid State Grants Institutional Grants Private and Employer Grants
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

23

providing context on where undergraduates choose to attend. The latest enrollment data, from

fall 2021, shows that about 44 percent of all undergraduate students were enrolled at 4-year 

public institutions, 20 percent at 4-year private nonprofit institutions, 28 percent at 2-year public 

colleges, and 7 percent at private for-profit schools. 

2021 Fall Undergraduate Enrollment (Percent of FTE)

 The table below shows a summary breakout percentage distribution of specific financial aid 

sources by school sector. For example, the portion of Pell Grant funds going to students in 

public 4-year schools is about the same as that going to students in public 2-year schools, but 

more than double the portion in private 4-year and for-profit school sectors. Subsidized Stafford 

Loan funds are concentrated in the public 4-year sector, and Grad PLUS funds are 

concentrated in the private 4-year sector. The public 2-year sector has the lowest borrowing 

percentages of any sector. 

Percentage Distribution of Selected Federal Aid Funds by Sector, 2021-221

Type of Aid Public 4-yr Private 4-yr Public 2-yr For-profit

Pell Grant 39% 17% 29% 15%

Subsidized Stafford 43 28 10 19

Unsubsidized Stafford 41 40 4 15

Parent PLUS 50 42 1 6

Grad PLUS 27 68 0 6

FFEL LIQUIDATING ACCOUNT

Per the Federal Credit Reform Act of 1990, the cost of FFEL student loan commitments made 

prior to fiscal year 1992 is appropriated annually under indefinite authority and shown in a 

Liquidating Account on a cash basis. This account does not issue any new loans and loanlifetime costs are not estimated. The Liquidating Account pays for pre-1992 student loan 

activities, such as loan default payments, special allowance payments, and interest benefits. 

1 Row percentages may not sum to 100 due to rounding; columns are not intended to sum to 100.

Public 4-Year

44%

Private Nonprofit 4-

Year

20%

For-Profit

7%

Public 2-Year

28%
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

24

Consequently, as default and in-school interest costs on these older loans decline over time and 

recoveries on defaulted loans continue to be collected, annual revenues—offsetting 

collections—will more than offset annual costs, resulting in negative program costs for which no 

new budget authority is needed. Based on the 2025 President’s Budget, total net outlays in the 

Liquidating Account are estimated at -$212 million in fiscal year 2024, and -$170 million in fiscal 

year 2025, meaning collections are expected to exceed payments. A portion of these net 

collections is returned to the U.S. Treasury as a capital transfer each year. 

FEDERAL STUDENT LOAN RESERVE FUND

The Amendments to the HEA of 1998 clarified that reserve money held by public and non-profit 

guaranty agencies participating in the FFEL program are Federal property when held in the 

Federal fund, (i.e., Reserve Fund), as opposed to funds held in the Operating Fund over which 

guaranty agencies retain control. The Federal fund is used to pay default claims from FFEL 

lenders, and other claims related to death, disability, bankruptcy, and closed schools. This fund 

also pays fees to support successful guaranty agency efforts to avert defaults. Federal 

reimbursements for default claim payments are also paid into this fund. The Consolidated 

Appropriations Act, 2016, increased the reimbursement percentage paid to guaranty agencies 

by the Department of Education from 95 percent to 100 percent.

The Reserve Fund’s major revenues are reinsurance payments from the Federal Government, 

and its major expenses are insurance payments to lenders. The Fund began fiscal year 2023 

with an adjusted unobligated balance of about $725 million and ended the year with a balance 

of about $560 million, which became the starting balance for fiscal year 2024. Fiscal year 2024 

is estimated to have an ending balance of $684 million. The drawdown in Reserve fund 

balances was the result of guidance from the Secretary allowing guaranty agencies to access 

Federal funds to support refunds of collections to borrowers during the payment pause and 

reimburse losses due to the pause in collection activity.
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

25

PROGRAM OUTPUT MEASURES1

Output Measures: Direct Loans 2023 2024 2025

Direct Stafford Loans:

Direct Stafford: Loan volume ($ in millions)2 $16,329 $16,867 $16,995

Direct Stafford Number of loans (in thousands) 4,673 4,834 4,856

Direct Stafford Average loan (whole $) $3,494 $3,489 $3,500

Direct Stafford Subsidy rate2 17.42% 26.22% 26.34%

Direct Unsubsidized Stafford Loans 

(Undergraduate):

Direct Unsubsidized: Loan volume ($ in millions)2 $45,555 $47,229 $47,672

Direct Unsubsidized: Number of loans (in thousands) 6,557 6,813 6,847

Direct Unsubsidized: Average loan (whole $) $6,948 $6,932 $6,962

Direct Unsubsidized: Subsidy rate2 8.01% 17.46% 29.49%

Direct Unsubsidized Stafford Loans 

(Graduate):

Direct Unsubsidized: Loan volume ($ in millions)2 $26,987 $27,794 $28,060

Direct Unsubsidized: Number of loans (in thousands) 1,693 1,748 1,750

Direct Unsubsidized: Average loan (whole $) $15,937 $15,897 $16,035

Direct Unsubsidized: Subsidy rate2 12.26% 21.69% 24.14%

Direct PLUS Loans (Parents of Undergrads):

Direct Unsubsidized: Loan volume ($ in millions)2 $12,218 $12,836 $13,443

Direct Unsubsidized: Number of loans (in thousands) 713 733 753

Direct Unsubsidized: Average loan (whole $) $17,138 $17,513 $17,845

Direct Unsubsidized: Subsidy rate3 -41.14% -26.20% -22.23%

Direct PLUS Loans (Graduate): 

Direct PLUS: Loan volume ($ in millions)2 $14,280 $14,648 $14,990

Direct PLUS: Number of loans (in thousands) 647 663 660

Direct PLUS: Average loan (whole $) $22,086 $22,094 $22,713

Direct PLUS: Subsidy rate3 8.68% 19.34% 24.17%

Direct Consolidation Loans:

Direct Consolidation: Loan volume ($ in millions)2 $40,785 $42,137 $41,464

Direct Consolidation: Number of loans (in thousands) 860 888 875

Direct Consolidation: Average loan (whole $) $47,397 $47,462 $47,397

Direct Consolidation: Subsidy rate3 49.64% 42.19% 47.74%

Total Direct Loans:4

Total Di: Loan volume ($ in millions)5 $129,167 $133,717 $134,564

 ct Number of loans (in thousands) 13,449 13,931 13,991

1 Numbers in Program Output Measures tables may not add due to rounding. 2 Net commitments (disbursements) that are less than amounts committed (e.g., due to loan cancellations).

3 This rate generally reflects the Federal cost per new loan dollar. When negative, this rate indicates a net savings to 

the Federal Government. Subsidies are weighted on gross volumes and are consistent with the rates shown in the 

text table on Student Loan Program Costs that appears in the Budget Appendix.

4 Totals reflect DL program amounts only—no Perkins Loans. 5 Net commitments (disbursements) that are less than amounts committed (e.g., due to loan cancellations).
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

26

Output Measures: Direct Loans 2023 2024 2025

Total Direct Average loan (whole $) $9,604 $9,599 $9,618

Subsidy Cost:1

Total Direct New loan subsidy cost ($ in millions) $19,290 $32,986 $42,267

Total Direct Subsidy Net Reestimate ($ in millions) -$1,917 $64,160 0

Total Direct Net Modification ($ in millions) -$202,558 0 0

DL Total Net Subsidy ($ in millions) -$185,186 $97,147 $42,267

Total Direct Weighted Average Subsidy rate2 17.90% 22.87% 27.60%

Outstanding Loan Volume ($ in billions):

Total Direct Loans Outstanding3 $ 1,336 $1,364 $1,397

There are no new FFEL program loans. Information on the FFEL annual reestimates and

subsidy modifications, as well as outstanding loan volume, are presented below.

Output Measures: FFEL Loans 2023 2024 2025

Subsidy Cost

Subsidy Cost: Net Reestimate ($ in millions)4 $2,026 9,637 0

Subsidy Cost: Net Modification ($ in millions) -4,565 0 0

Total FFEL Net Subsidy ($ in millions) -2,539 9,637 0

Outstanding Loan Volume ($ in billions):

Outstanding: FFEL Loans $118 $111 $103

Outstanding: ECASLA Loans 38 33 30

Outstanding: Liquidating Account Loans 3 3 3

Total Combined Outstanding Loan Volume5 159 147 136

1 Subsidy amounts of existing loans are estimated on a net present value basis. Negative subsidy results in a net 

savings to the Federal Government. Net reestimates and modifications may reflect both upward and downward 

amounts—consistent with data on page 1. 2 This rate generally reflects the Federal cost per new loan dollar. When negative, this rate indicates a net savings to 

the Federal Government. Subsidies are weighted on gross volumes and are consistent with the rates shown in the 

text table on Student Loan Program Costs that appears in the Budget Appendix. 

3 Reflects total Direct Loan principal (including Consolidations) as the end-of-year estimate. 4 Subsidy amounts are estimated on a net present value basis, and since no new FFEL loans are made, only net 

reestimates and net modifications are reported. Reestimates may reflect both upward and downward amounts—

consistent with data on page 1.

5 Reflects total FFEL and Liquidating account loan principal (including Consolidations) as end-of-year estimate.
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

27

MEDIAN FEDERAL STUDENT LOAN DEBT

The median level of outstanding Federal student loan balances owed (i.e., Subsidized Stafford 

and Unsubsidized Stafford Loans) per student for all undergraduate borrowers upon entering 

repayment has increased substantially over time, from $3,498 in 1990, to $8,750 in 2000, and to 

$18,254 for those who entered repayment in 2022. Over this thirty-year period, median 

balances on undergraduate loans have grown by more than five times. Graduate borrower 

median federal loan debt has also increased substantially from $8,626 in 1990, to $22,906 in 

2000, and $41,460 in 2022. Amounts are shown in current dollars, unadjusted for inflation, and 

are based on data from the NSLDS. Graduate debt reflects borrowing at the graduate level only.

Median debt entering repayment is beginning to decrease, most significantly for graduate 

borrowers. 

Median Undergraduate Federal Student Loan Debt When Entering Repayment

0

5,000

10,000

15,000

20,000

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 16 18 20 22

Debt Level: Whole Dollars

Enter Repayment Fiscal Year 
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

28

Median Graduate Federal Student Loan Debt When Entering Repayment

UNDERGRADUATE AND GRADUATE BORROWER DISTRIBUTION BY 

FAMILY INCOME

This chart reflects the percentage of dependent and independent undergraduate borrowers of 

Subsidized and Unsubsidized Stafford Loans at various family income levels, according to 

NSLDS data for academic year 2021-2022. Graduate student data is also presented. 

Approximately 51 percent of Subsidized Stafford Loan dependent borrowers come from families 

with under $60,000 in family income, compared to about 35 percent of the Unsubsidized

Stafford Loan dependent borrowers. Notably, nearly 60 percent of all Unsubsidized Stafford 

Loan dollars go to dependent students from families with incomes greater than $100,000.

Independent undergraduate student borrowers are fairly similar in their borrowing pattern for 

both Subsidized and Unsubsidized Stafford loans. Almost half of all independent undergraduate 

student recipients of Subsidized or Unsubsidized loans are from households in the under-

$20,000 income category. Similarly, graduate student borrowers are concentrated in the under-

$20,000 income category.

Percentage of Borrowers and Dollars of Aid by Income Category: AY 2022-23 (NSLDS)1

Dependent Students (Income Categories = dollars in thousands)

Loan Type Measure 0-$20 $20-40 $40-60 $60-80 $80-100 $100+

Subsidized 

Stafford

Borrowers 16.5% 18.4% 16.0% 13.7% 11.6% 23.9%

Subsidized 

Stafford

Dollars 16.1% 18.5% 16.3% 14.0% 11.6% 23.4%

Unsub. Stafford Borrowers 11.3% 12.7% 11.4% 10.4% 10.3% 43.8%

Unsub. Stafford Dollars 7.8% 8.5% 7.7% 7.5% 8.7% 59.8%

1 In these three tables, Loan Type measures for Borrowers and Dollars add across columns to 100 percent.

Income category columns $20-40 through $100+ reflect income amounts of $20,001- $40,000 and so forth. 

0

10,000

20,000

30,000

40,000

50,000

90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22

Debt Level: Whole Dollars

Enter Repayment Fiscal Year
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

29

Independent Students (Income Categories = dollars in thousands)

Loan Type Measure 0-$20 $20-40 $40-60 $60-80 $80-100 $100+

Subsidized 

Stafford

Borrowers 45.2% 28.2% 11.3% 5.5% 3.1% 6.8%

Subsidized 

Stafford

Dollars 44.3% 28.7% 11.4% 5.6% 3.2% 6.9%

Unsub. Stafford Borrowers 42.5% 26.9% 11.4% 6.0% 3.8% 9.4%

Unsub. Stafford Dollars 40.1% 26.5% 11.6% 6.4% 4.2% 11.1%

Graduate Students (Income Categories = dollars in thousands)

Loan Type Measure 0-$20 $20-40 $40-60 $60-80 $80100 $100+

Unsub. Stafford Borrowers 41.6% 18.5% 12.7% 7.8% 5.5% 14.0%

Unsub. Stafford Dollars 48.4% 17.7% 11.1% 6.6% 4.5% 11.7%

PLUS Borrowers 54.2% 16.8% 9.6% 5.5% 3.5% 10.4%

PLUS Dollars 56.6% 16.5% 8.8% 5.1% 3.2% 9.9%

UNDERGRADUATE STUDENTS BY INCOME CATEGORY

This table, using the most recent National Postsecondary Student Aid Study (NPSAS 2020) 

data from academic year 2019-2020, shows the percentage of all undergraduates according to 

income categories; and within income categories, the percentage of each income group that 

received Subsidized Stafford Loans, Unsubsidized Stafford Loans, or any form of Federal aid, 

such as Pell Grants, Work Study, or student loans. For example, 16.1 percent of all dependent 

undergraduates are from families with total income under $20,000 and, of that group, 

30.9 percent received Subsidized Stafford Loans, 23.6 percent received Unsubsidized Stafford 

Loans, and 75.8 percent reported receiving some type of Federal aid.

This table shows that Federal aid in general goes to lower- and middle-income groups, as 

intended. For instance, in the dependent students table, the two lowest family income 

categories—0-$19,999 (0-$20) and $20,000-$39,999 ($20-40)—have the highest percentages 

of students receiving some form of Federal aid, corresponding to 75.8 percent and 76.4 percent, 

respectively, while the highest income category—$100,000+—reflects the lowest percentage of 

dependent undergraduates receiving aid, at 34.5 percent.
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

30

Percentage of Undergraduate Students by: 1) Income Level and 2) Within Income Level, 

By Type of Federal Aid: Academic Year 2019-20 (NPSAS)1

Dependent Students (Income Categories = dollars in thousands)

Group Type Measure 0-$20 $20-40 $40-60 $60-80 $80-100 $100+

Undergraduates Students 16.1% 17.0% 12.3% 10.0% 8.9% 35.7%

Subsidized Stafford % Receiving 30.9% 34.9% 40.3% 39.9% 35.3% 16.4%

Unsub. Stafford % Receiving 23.6% 28.1% 33.2% 33.6% 37.3% 31.7%

Federal Aid % Receiving 75.8% 76.4% 72.4% 54.8% 45.9% 34.5%

Independent Students (Income Categories = dollars in thousands)

Group Type Measure 0-$20 $20-40 $40-60 $60-80 $80-100 $100+

Undergraduates Students 44.7% 25.5% 13.0% 7.2% 3.6% 5.9%

Subsidized Stafford % Receiving 33.6% 31.8% 24.6% 18.6% 19.1% 9.3%

Unsub. Stafford % Receiving 30.0% 27.8% 22.2% 18.2% 19.7% 18.7%

Federal Aid % Receiving 65.8% 54.4% 42.4% 32.5% 28.1% 20.3%

1 In both tables above, the “Undergraduates” percentages will add across columns to 100 percent. However, the 

“% Receiving” aid measures are not all mutually exclusive. Therefore, they are not intended to and will not sum to 

100 percent, across columns or by income level.

“Federal Aid” reflects percentages of students receiving any form of Federal aid including student loans, grants, or 

work-study.
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

31

LOAN VOLUME BY INSTITUTIONAL SECTOR

The following charts are based on NSLDS and related data. 

Distribution of New Loan Volume Dollars by Institution

FY 2023 4-Yr. Public 4-Yr. Private 2-Yr. Public 2-Yr. Private Proprietary

Direct Loans 40.9% 40.8% 3.1% 0.4% 13.0% 

The following graph depicts annual gross commitment loan volume trends by 4-year (public and 

private), 2-year (public and private), and proprietary school sectors. (Direct Loans are from 

program inception in fiscal year 1994.)

Annual Loan Volume by 4-Year, 2-Year, and Proprietary School Sectors

• Loan volume at 4-year institutions increased steadily from more than $5 billion in fiscal year

1984 to almost $83 billion in fiscal year 2011. It remained relatively level until an uptick in 

2016 and a noticeable decrease in 2020 to just under $70 billion. In 2023, there was a slight 

increase to $71 billion. Loan volume at 4-year institutions accounted for almost 82 percent of 

all volume in fiscal year 2023. 

• Loan volume at proprietary institutions increased substantially between fiscal years 1999

and 2010. However, proprietary school loan volume has continued to decline between fiscal 

years 2010 and 2021, from $29.4 billion to $11.2 billion. Proprietary school loan volume 

accounted for 26 percent of total volume in fiscal year 2010 but only 13 percent in 2023. 

• Loan volume at 2-year institutions is comparatively small as school costs are also much 

lower. Volume remained steady at about $2 to $4 billion for many years before increasing to 

$8 to $10 billion after the economic downturn in 2008. Levels have since decreased 

annually for the past 7 years, to $3.1 billion in fiscal year 2023. 

0

10

20

30

40

50

60

70

80

90

'85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15 17 19 21 23

Volume: $ Billions

Fiscal Years 1984 - 2021

4-year 2-year Proprietary
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

32

LOAN VOLUME BY SUBSIDIZED AND UNSUBSIDIZED STAFFORD 

LOANS

As of July 1, 2012, graduate and professional students are no longer eligible for Subsidized 

Stafford Loans, explaining the sharp decrease in the Subsidized Stafford Loan volume in that 

year. Since then, graduate and professional borrowing has seen a steady increase, while 

undergraduate borrowing has declined. Those trends explain the widening gap between 

Subsidized and Unsubsidized Stafford Loan volume in recent years.

Subsidized Stafford Loan and Unsubsidized Stafford Loan Volume1

. 

PROGRAM PERFORMANCE INFORMATION

Performance Measures

This section presents selected program performance information, including, for example, 

program goals, objectives, measures, and performance targets and data. Achievement of 

program results is based on the cumulative effect of the resources provided in previous years, 

and those requested in fiscal year 2025 and future years, as well as the resources and efforts 

invested by those served by this program. 

Certain loan-specific performance measures are included in this section, including teacher loan 

forgiveness, default rates, and loan recovery rates. However, because the student loan 

programs and other Federal financial aid programs are often viewed in combination, they 

typically rely on the same performance measures, strategies, and program improvement 

activities. Such measures are discussed in the Student Financial Assistance Congressional 

Justification and are not repeated here.

1 Loan volume is estimated for fiscal years 2021-2024. 

0

10

20

30

40

50

60

'93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 18 19 20 21 22 23

Volume: $ Billions

Fiscal Year Subsidized Stafford

Unsubsidized Stafford
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

33

Teacher Loan Forgiveness: In response to a GAO recommendation regarding the 

development of program performance measures for Teacher Loan Forgiveness (TLF), the 

Department initiated a metric to track the number of borrowers who receive TLF.

Since trends in loan forgiveness tend to follow trends in the Stafford loan program, this metric 

will track the number of Stafford borrowers (Subsidized and Unsubsidized) who receive 

forgiveness per year, including loans from both Direct Loan and FFEL programs. Borrowers 

receiving Teacher Loan Forgiveness are estimated to increase as the Department finds ways to 

better publicize and promote this program. Specifically, the Department is working on ways to 

raise awareness among current and incoming students and among potentially eligible borrowers 

who have already entered the workforce. In fiscal year 2022, approximately 23,000 teachers 

received loan forgiveness amounting to $223.2 million in dollars discharged, with an average 

balance discharged of about $9,704. 

The following table reflects current baseline actuals (2010 – 2022) and target levels—

starting with 2017, the first year of establishing this measure.

Teacher Loan Forgiveness Performance Measure

Fiscal Year

Target

Number of Borrowers 

Receiving Forgiveness

Actual

Number of Borrowers 

Receiving Forgiveness

2010 — 20,900

2011 — 28,800

2012 — 28,400

2013 — 35,000

2014 — 39,500

2015 — 38,400

2016 — 38,400

2017 37,000 42,400

2018 38,000 45,000

2019 42,500 39,600

2020 43,500 35,200

2021 45,000 28,100

2022 46,000 23,000

2023 47,000 —

2024 48,500 —

2025 49,000 —

General Borrowing Trends: Based on the 2008 National Postsecondary Student Aid Study 

(NPSAS), 46.9 percent of all undergraduates reported receiving some type of Federal Title IV 

financial aid in 2007-2008, and 34.5 percent reported borrowing a Federal Stafford (Subsidized 

or Unsubsidized) Loan. In the 2012 NPSAS, 57.2 percent of undergraduates reported receiving 

some type of Federal Title IV aid, and 40.1 percent reported having borrowed a Federal Stafford 

Loan in 2011-2012. Data from the 2016 NPSAS reveals 54.4 percent of undergraduates 

reported receiving some type of Federal Title IV aid, and 36.2 percent reported having borrowed 

a Federal Stafford Loan in 2015-2016. 
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

34

Data from the 2020 NPSAS shows that 54.9 percent of undergraduates reported receiving some 

type of Federal Title IV aid, and 34.3 percent reported having borrowed a Federal Stafford Loan

in 2019-2020, reflecting a decrease in the portion of students who reported borrowing a Stafford 

Loan in recent years. Of undergraduates who borrowed a Federal Stafford Loan, the average 

amount borrowed was $5,000 in 2007-2008, $6,400 in 2011-2012, $6,600 in 2015-2016, and 

$6,500 in 2019-2020.

In addition, graduate and professional student borrowing reflects a similar pattern. According to 

the 2008 NPSAS, 38.9 percent of graduate and first-professional students reported borrowing a 

Subsidized or Unsubsidized Stafford Loan in 2007-08, while this figure was 43 percent in 2011-

2012 and 39.9 percent in 2015-2016. Data from the 2020 NPSAS shows 34.8 percent. The 

average Stafford Loan amount borrowed by graduate and first-professional students was 

$15,600 in 2007-2008, $17,000 in 2011-2012, $18,200 in 2015-2016, and $18,700 in 2019-

2020. Graduate students were not eligible for Subsidized Stafford Loans as of July 1, 2012.

The percentage of graduate students who reported borrowing PLUS loans jumped from 

4.9 percent in 2007-2008 to 9.9 percent in 2011-2012, with the average amount growing from 

$15,500 to $18,600. Some of this trend was due to the change in graduate student eligibility for 

Subsidized Stafford and to the increasing use of PLUS, rather than private loans. Data from the 

2016 NPSAS shows that 10 percent of graduate students reported borrowing PLUS Loans with 

an average amount of $22,300. Data from the 2020 NPSAS shows that 11.1 percent of 

graduate students reported borrowing PLUS Loans with an average amount of $25,100.

In fiscal year 2023, the Direct Loan program, excluding Consolidations, provided more than $88 

billion in new loan assistance to an estimated 6.4 million qualified borrowers. In doing so, the 

Federal student loan programs helped ensure access to postsecondary education by providing 

loans to students and their families at lower interest rates and with more favorable repayment 

terms than student borrowers would likely be able to obtain elsewhere. While private loans are 

another source of aid, many private lenders have underwriting standards that would restrict 

access to students with little or no work experience or credit history. In addition, private loans do 

not always offer the same benefits as Federal loans and may have higher interest rates.

NATIONAL STUDENT LOAN COHORT DEFAULT RATE

Given the substantial volume of Federal student loans, with more than a trillion dollars 

outstanding, ensuring that those taxpayer-funded loans are repaid is critical to the long-term 

success of the student loan program. Since the consequences of default on a Federal student 

loan are severe, the Department is committed to ensuring that borrowers can easily select a 

repayment plan and manage their repayments. 

The national student loan “cohort default rate” measures student loan borrower default behavior 

in the first 3 years of repayment but excludes PLUS loan defaults. This cohort default rate 

measure was established by the Omnibus Budget Reconciliation Act of 1990 to exclude “highdefault” institutions from participation in the loan programs. The measure looked at the 

performance of an institution’s loans in the first 2 years of repayment. Under this law, schools 

were excluded from FFEL, Direct Loan, and Pell Grant program eligibility for at least 3 years if 

they hit or exceeded a 25 percent default rate threshold for 3 consecutive years.
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

35

The Higher Education Opportunity Act of 2008 (HEOA) raised the 25 percent threshold to 

30 percent for fiscal years 2012 and beyond. HEOA also changed the window from 2 years to 3 

years, starting with the borrowers who would enter repayment in fiscal year 2009. Only the 3-

year cohort default rate is now published, starting with the 2012 cohort. The first official 3-year 

cohort default rate was 13.4 percent for the 2009 cohort and was published on September 28, 

2012. The most recent 3-year cohort default rate for the 2020 cohort was 0.0 percent. As 

expected, fiscal year 2020 cohort default rates were significantly impacted by the pause on 

federal student loan payments that began on March 13, 2020. During the pause, Direct Loan 

borrowers were not required to make any payments, and no borrowers with Direct Loans 

entered default. Fewer than 200 borrowers with FFEL loans, which were not eligible for the 

payment pause, entered default during the fiscal year 2020 cohort default rate measurement 

period. But this default activity, relative to the total number of borrowers entering repayment, 

was not significant enough to raise the fiscal year 2020 cohort default rate above 0.0 percent. 

As the CARES Act borrower relief provisions continue to overlap with future cohort default rates, 

these rates are temporarily less instructive about borrower default behavior, however the 

Department will continue to publish cohort default rates annually.

2-Year and 3-Year National Cohort Default Rates

The national cohort default rate (as shown above) measures prior borrower default behavior in 

just the first 2 years or 3 years of repayment—any defaults outside this period are not 

incorporated into the default rate. As a result, this rate does not reflect the forward-looking 

“lifetime dollar default rates” used in budget formulation to project future default costs. Lifetime 

default rates account for defaults over the entire loan-life and are significantly higher than the 3-

year cohort default rate. 

FY 2025 COHORT LIFETIME DOLLAR DEFAULT AND RECOVERY RATES

The following table shows the estimated dollar default and recovery rates for the 2024 cohort of 

new loans in the Direct Loan program. The default rates reflect the percentage of dollars 

17.617.2

21.422.4

17.8

15

11.610.710.4 9.6 8.8

6.9

5.6 5.9 5.4 5.2 4.5 5.1 4.6 5.2

6.7 7.0

8.8 9.1 10

13.4

14.713.7

11.8

11.311.510.810.1 9.7

7.3

2.3

0

5

10

15

20

25

'87'88'89'90'91'92'93'94'95'96'97'98'99'00'01'02'03'04'05'06'07'08'09'10'11'12 13 14 15 16 17 18 19 20

Default Rate (%)

Fiscal Year (Repayment Cohort)

2-Year National 3-Year National
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

36

estimated to go into default over the life of the cohort. The recovery rates reflect the percentage 

of dollars the Federal Government estimates it will recover on those defaults. Since interest 

continues to accrue during default, it drives the estimate of total collections. However, the 

Federal Government might only recover some or none of the dollars for a default, particularly if 

a borrower enters an IDR plan after entering repayment. Due to the Fresh Start program, 

collection activities on defaulted loans in the Direct Loan program are currently suspended.

FY 2025 Baseline Cohort Lifetime Dollar Default and Recovery Rates

Direct Loans

Lifetime 

Default 

Rate

Cash 

Recovery 

Rate

Cash 

Recovery Rate

(net of CCC)

NPV Recovery 

Rate (net of 

CCC)

Subsidized Stafford 23.58% 96.73% 92.22% 73.88%

Unsub Stafford 

(Undergrad) 

28.53% 91.46% 87.29% 70.09%

Unsub Stafford (Graduate) 15.41% 85.09% 80.88% 68.86%

Unsub Stafford 

(Combined)

20.81% 88.68% 84.50% 74.66%

PLUS (Undergrad) 15.52% 87.12% 83.45% 65.17%

PLUS (Graduate) 13.71% 81.25% 77.16% 65.98%

PLUS (Combined) 14.57% 84.21% 80.33% 65.55%

Lifetime Default Rate: Default rates for the 2025 cohort of Direct Loans range from a high of 

28.53 percent for Unsubsidized Stafford Loans to undergraduates down to 13.71 percent for 

PLUS Loans to graduate students. Lifetime dollar defaults as a percentage of disbursements 

reflect outstanding principal and interest at time of default divided by original loan dollar 

amounts disbursed, all on a cash basis, without adjusting for net present value.

Cash Recovery Rate: This cash recovery rate follows the methodology used in prior years 

where contract collection costs (CCC) are included in the gross recovery rate. This column 

reflects cumulative principal, interest, and fee recoveries on defaulted loans divided by the 

outstanding principal and interest at time of default, all on a cash basis. It includes collection 

costs that are assessed on the loans of defaulted borrowers. As of November 2021, all contact 

center and customer support activities associated with defaulted accounts are performed by the 

Default Resolution Group with FSA’s Debt Management Collections System (DMCS) contract 

with Maximus Federal Services (MFS). FSA ultimately intends for the Business Process 

Operations (BPO) vendors to begin handling default collections. However, these collection costs 

on loans owned by the Department may not be assessed on those borrowers who meet certain 

conditions and enter back into a good standing on their loans. Rehabilitated loan payments and 

loans that consolidate from a defaulted status are included in the collection rate for the cohort 

the loan was originated.

For instance, borrowers may choose to rehabilitate a defaulted loan which would get the loan 

out of default status. Generally, this involves borrowers making nine voluntary reasonable and 

affordable monthly payments (as determined by the loan holder) within 20 days of the due date 

and within a period of 10 consecutive months. Reasonable and affordable is considered equal 

to 15 percent of annual discretionary income divided by 12. In some cases, alternative monthly 

payments can be arranged that are lower. Collection costs are not assessed on loans in a 
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

37

rehabilitation status. 

Cash Recovery Rate (net of CCC): This column shows cash recovery rates net of contract 

collection costs—where contract collection costs are not included—since the dollars do not 

return to the Federal Government but were used to pay private contractors supporting elements 

of FSA’s debt collection effort. 

This column reflects cumulative principal, interest, and fee recoveries on defaulted loans divided 

by the outstanding principal and interest at time of default, all on a cash basis. It does not 

include collection costs. However, these collection costs may not be assessed on those 

borrowers who meet certain conditions and enter back into a good standing on their loans.

These estimates also assume that borrowers who return to good standing repay their loans 

under the original loan terms.

NPV Recovery Rate (net of CCC): This rate shows recovery rates net of contract collection 

costs using a net present value (NPV) basis, which considers the factor of time on the dollar 

value of missed payments due to default and subsequent default collections. Under the NPV 

basis, the recovery rates reflect the discounting of missed payments due to default and 

subsequent loan collections over a 40-year loan lifetime window. The NPV recovery rate helps 

provide a broader context over time for determining the success of collection efforts in 

recovering defaulted Direct Loans. 

This column reflects cumulative principal, interest, and fee recoveries on defaulted loans divided 

by the outstanding principal and interest at time of default on an NPV basis, using 2025 budget 

discount rates. It does not include collection costs. However, these collection costs may not be 

assessed on those borrowers who meet certain conditions and who return to repayment and

good standing on their loans. These estimates also assume that borrowers who return to good 

standing repay their loans under the original loan terms.
STUDENT LOANS OVERVIEW

FFEL and Direct Loans

38

Account Summary Table

Select here for the online version. DEPARTMENT OF EDUCATION FISCAL YEAR 2025 PRESIDENT'S BUDGET

(in thousands of dollars)

Cat Code 2023

Appropriation

2024

Annualized CR

2025 President's 

Budget

FY 2025 Request 

Compared to FY 

2024 Annualized CR 

Amount

FY 2025 Request 

Compared to FY 

2024 Annualized CR 

Percent

Federal Direct Student Loans Program Account (HEA IV-D)

1. New loan subsidies M 20,973,978 33,538,043 42,266,917 8,728,874 26.03%

2. New net loan subsidy (non-add) M 19,290,143 32,986,256 42,266,917 9,280,661 28.13%

3. Upward reestimate of existing loans M 8,131,676 65,842,936 0 (65,842,936) -100.00%

4. Downward reestimate of existing loans(non-add) M (10,049,156) (1,682,552) 0 1,682,552 100.00%

5. Net reestimate of existing loans(non-add) M (1,917,480) 64,160,384 0 (64,160,384) -100.00%

6. Upward modification of existing loans M 116,808,248 0 0 0 ---

7. Net modification of existing loans(non-add) M (202,558,349) 0 0 0 ---

8. Temporary Expanded Public Service Loan Forgiveness D 0 0 0 0 ---

Subtotal, loan subsidies 145,913,902 99,380,979 42,266,917 (57,114,062) -57.47%

Subtotal, new loan subsidies and net reestimate/modification (non-add) (185,185,686) 97,146,640 42,266,917 (54,879,723) -56.49%

Total 145,913,902 99,380,979 42,266,917 (57,114,062) -57.47%

Discretionary D 0 0 0 0 ---

Mandatory M 145,913,902 99,380,979 42,266,917 (57,114,062) -57.47%

Federal Family Education Loans Program Account (HEA IV-B)

1. Upward reestimate of existing loans M 2,924,909 11,976,626 0 (11,976,626) -100.00%

2. Downward reestimate of existing loans(non-add) M (899,176) (2,339,384) 0 2,339,384 100.00%

3. Net reestimate of existing loans(non-add) M 2,025,733 9,637,242 0 (9,637,242) -100.00%

4. Upward modification of existing loans M 9,082,129 0 0 0 ---

5. Downward modification of existing loans(non-add) M (13,647,235) 0 0 0 ---

6. Net modification of existing loans(non-add) M (4,565,106) 0 0 0 ---

Total, FFEL Program Account M 12,007,038 11,976,626 0 (11,976,626) -100.00%

Total, new loan subsidies and net reestimate (non-add) 2,025,733 9,637,242 0 (9,637,242) -100.00%

Federal Family Education Loans Liquidating Account (HEA IV-B)

1. Pre-1992 student loans M 0 (212,174) (170,300) 41,874 19.74%

NOTES:

1) D = discretionary program; M = mandatory programs

2) Pursuant to the Budget Control Act of 2011 (P.L. 112-25), for most mandatory programs, with the exception of Pell Grants, Credit Liquidating, and Credit Reestimates, the levels shown in the 2023 and 2024 

Appropriation columns reflect the 5.7 percent reduction that went into effect on October 1, 2022 and October 1, 2023, respectively.

3) Detail may not add to totals due to rounding.