The Direct Loan Program offers students and parents access to federally guaranteed loans in as simplified a process as possible. With volatility in the credit markets and changes in federal law that have reduced the number of private lenders offering Federal Educational Loans, the Direct Loan Program is the best way to ensure loan availability for students and parents.
In the Direct Loan Program, the U.S. Department of Education acts as a lender, providing funds for Stafford Loans and PLUS Loans. With FFELP, students chose a bank or lender; the college then certifies that students and parents are eligible for the loans and applies the loan proceeds to student accounts.
Interest: The interest rate for the Subsidized Direct Loan for undergraduates will be 3.4% for loans disbursed between July 1, 2012 and June 30, 2013. The interest rate for the Unsubsidized Direct Loan is also fixed at 6.8%. The interest rate for graduate students is 6.8% on Unsubsidized Direct Loans; Subsidized Direct Loans are no longer be available to graduate students. The PLUS Direct loan interest rate is fixed at 7.9%.
Origination fee: The origination fee for Subsidized and Unsubsidized Direct loans is 1% for loans disbursed after July 1, 2012. The origination fee is retained by the federal government to reduce the cost of supporting these low interest loans. The PLUS Direct loan has a 4% origination fee.
Yes, all students and parents who apply for Stafford or PLUS Loans after summer 2010 will be borrowing through the Federal Direct Loan Program. As always, students may apply for private (non-federal) loans through the lender of their choice.
Yes! You must complete a Direct Loan MPN online. You can complete the MPN online at
www.studentloans.gov. You will need your FAFSA pin number to sign the note electronically. If you do not have a pin, you may obtain one at
www.pin.ed.gov.
No, you will not have to complete entrance loan counseling if you did so under FFELP. Only new borrowers will be required to complete entrance loan counseling.
You have the choice of repaying your FFELP Loans separately according to the terms of repayment agreed to in your promissory note with your lender(s), or you can consolidate your FFELP Loans with your Direct Loans into one payment after you leave school. For more information on Direct Loan Consolidation, you may go to
www.loanconsolidation.ed.gov.
Your Stafford loans from previous years should remain in deferment as long as you are enrolled at least half-time for your program. You may be responsible for notifying your lender if your enrollment status changes.
You can find information about the servicers of your other federal loans at
www.nslds.ed.gov. You will need your pin number from the FAFSA to access this information.
The Direct Loan Program offers:
- A guaranteed source of funding for federal student loans
- A lower interest rate on Graduate and Parent PLUS loans
- A single point of service for students or parents during repayment
- Additional repayment options and interest rate reductions for on time payments
- The Public Service Loan Forgiveness Program
You can learn about the types and terms of federal loan repayment and the potential forgiveness programs at
www.studentloans.gov
The application process for Direct Loans is the same as previous years. Students must complete the FAFSA. All students, even returning student borrowers, will need to complete a Direct Loan Master Promissory Note (MPN).
The Financial Aid Office will process your FAFSA application and send you an email notification when your financial aid is ready to review and accept on your myPoint. Once you have accepted your award and completed a new Direct Loan MPN (and any other requirements), your loan(s) will apply electronically toward your student bill approximately 6 days prior to the beginning of each term. However, you are encouraged to check your financial aid offer and status as well as read any and all emails you receive from the Financial Aid Office.
Under the PLUS Direct Loan, parents will also be borrowing through the U.S. Department of Education. Parents cannot apply through any other lender. A credit check is required however the PLUS Direct program uses a much more lenient credit assessment. Additionally, credit checks are only valid for 90 days. Parents may apply for the PLUS Direct Loan at
www.studentloans.gov.