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Emory University Transitions Student Loan Program to Direct Lending Effective Fall 2010

Emory University is transitioning to the William D. Ford Federal Direct Loan program effective Fall 2010. This decision was made to ensure students and parents continue to have uninterrupted access to federal loans. Currently Federal Stafford, PLUS and Grad PLUS loans are processed through the Federal Family Education Loan (FFEL) program. In FFEL, funds are provided from lenders while loan proceeds are provided directly from the federal government in the Direct Loan program. Proposed legislation will require all institutions to originate loans through the Direct Loan program. Emory is choosing to move to an exclusive Direct Lending option in 2010-11 to eliminate risks associated with late-breaking federal regulatory changes and market fluctuations in the FFEL program. Please select the following link to view a message from Provost Earl Lewis regarding Direct Lending.

What are the benefits of switching to the Federal Direct Loan Program?

  • Federal Stafford and PLUS/Grad PLUS loans are currently a stable, guaranteed source of funding.
  • The option of an income-contingent or income-based repayment plan is offered with Direct Lending.
  • Students in the Direct Loan program who enter into public service jobs may qualify for loan forgiveness.
  • The PLUS loan credit approval process in Direct Lending uses a more liberal credit assessment.
  • The interest rate for Direct PLUS Loans is 7.9% as compared to 8.5% in the FFEL program.

How Does the Direct Loan Transition Impact Student Loan Borrowers?

  • Students will no longer select a third-party lender for their Stafford Loans. If a Stafford Loan is offered in the financial aid notification, simply accepting the loan award will begin the origination/approval process.
  • All Stafford Loan borrowers (new and returning) must complete a new Master Promissory Note (MPN) in the Direct Loan program. MPNs signed prior to 2010 in the FFEL program are not valid within the Direct Loan program. Direct Stafford Loan MPNs can be completed online at http://www.dlenote.ed.gov prior to receiving an award for 2010-11. The same PIN used for completing the Free Application for Student Aid (FAFSA) is used to electronically sign the MPN. PINs can be obtained at: http://www.pin.ed.gov.
  • All Stafford loan borrowers must complete a new entrance interview for the Direct Loan program. Instructions for completing this loan requirement will be delivered in the award process.
  • Although the Office of Financial Aid will continue to certify PLUS loan eligibility, Parent Loan (PLUS) and Grad PLUS borrowers will no longer apply with private lenders. Do not complete a PLUS Loan pre-approval with a private lender for loan periods of August 2010 or later. The first step in the process is to complete a PLUS Loan Request form (an internal document for the Office of Financial Aid), which will let us know how much you wish to borrow. Forms and instructions can be found on our website under the Financing Options 2010-11 menu. Guidelines will also be emailed to students in the award process.
  • Continuing Stafford and PLUS borrowers will have split loan programs (FFEL and Direct Loan). Direct Loans will be serviced by the Department of Education and the current holder of any FFEL loans will service loans previously borrowed. Loan consolidation with the Department of Education allows for one single payment.
  • Terms and conditions of Direct Loans, in-school deferments and grace periods, mirror the FFEL program.
  • The process for credit-based private educational loans remains unchanged.

We recognize that the transition to a new loan program will require additional attention from continuing borrowers but believe the security offered in Direct Lending far outweighs the risks present in the FFEL program. Additional instructions and information will be provided to students throughout the 2010-11 financial aid cycle. Please review the financing options section of our website for details specific to the loan process. My staff and I stand ready to assist students and parents with a successful transition.

Sincerely,
Dean Bentley
Director
Office of Financial Aid
Emory University