Georgetown University :: Office of Student Financial Services

Federal Direct Loan Frequently Asked Questions

1) What is the difference between the Direct Loan program and the Federal Family Education Loan (FFEL) program?

The primary difference is the funding source. FFEL program loans came from private banks and other lending institutions, while the Direct Loan programs funds come from the federal government.

2) I previously borrowed loans through the FFEL program. Will I have to repay two different lenders?

Possibly. Many FFEL program loans have already been sold to the Department of Education, so your loans may be held by a different lender/servicer than the original one from which you borrowed. Upon repayment, you may owe loan funds to multiple entities. You may choose to make numerous monthly payments or you have the option of consolidating your student loans into one payment with the Department of Education. For further information pertaining to loan consolidation, please visit http://loanconsolidation.ed.gov .

3) While I am still enrolled in school, can I consolidate my federal loans?

Yes. Between July 1, 2010 and June 30, 2011, borrowers who have multiple types of federal loans and who have not yet entered repayment on at least one of their loans would be eligible to consolidate their loans into the DL program. To be eligible borrowers would have to have at least two of the following three types of loans: DL program loans; FFEL program loans held by an eligible FFEL program lender; and, FFEL program loans that have been purchased by the Secretary through an ECASLA program.

4) Where can I find information about who services my federal loans?

All of your student loan information may be found online through the National Student Loan Data System (NSLDS). You may review your loan records at nslds.ed.gov . You will need your federal PIN number to access your account. If you are unable to locate your PIN, you may request a duplicate PIN at http://www.pin.ed.gov. Please note that NSLDS only provides record of federal loans; private loans are not documented in this database.

5) I borrowed previously from a lender through the FFEL program. Do I have to complete another Master Promissory Note (MPN)?

Yes. All borrowers must complete a new MPN to receive loan funds because you will be borrowing from a new lender.

6) I borrowed through the Direct Lending program at another institution. Do I need to complete a new Master Promissory Note with the Department of Education?

No. Your Master Promissory Note is transferable between institutions.

7) What are the interest rates and fees charged in the Federal Direct Loan programs?

Federal Direct Loan Programs	2011-2012 Interest	2011-2012 Fees^*
Undergraduate Federal Direct Subsidized Loan	3.4%	0.5%
Undergraduate Federal Direct Unsubsidized Loan	6.8%	0.5%
Graduate Federal Direct Subsidized Loan	6.8%	0.5%
Graduate Federal Direct Unsubsidized Loan	6.8%	0.5%
Federal Direct PLUS Loan	7.9%	2.5%

^* Direct Loan Fee Rebate: The Subsidized and Unsubsidized Federal Direct Loans have a 1.0% origination fee and a 0.5% up-front interest rebate (for 2011-2012 academic year loans) on the origination fee - resulting in a net fee of .5%, which will be deducted from the gross amount of the loan borrowed. Once you enter repayment, if you make your first 12 monthly payments on time, the rebate becomes permanent. If you fail to make 12 on-time monthly payments, a charge for the initial rebate will be added to the outstanding balance of the loan.

The Federal Direct PLUS Loan has a 4% origination fee and a 1.5% up-front interest rebate (for 2011-2012 academic year loans) on the origination fee - resulting in a net fee of 2.5%, which will be deducted from the gross amount of the loan borrowed. Once in repayment, if the parent borrower makes the first 12 monthly payments on time, the rebate becomes permanent. If a parent borrower fails to make 12 on-time monthly payments, a charge for the initial rebate will be added to the outstanding balance of the loan.

8) I completed entrance counseling under the FFEL program, do I have to complete Direct Loan entrance counseling?

No. Previously completed entrance counseling under the FFEL program are acceptable in the Direct Loan program. Only first-time borrowers will be required to complete the entrance counseling for Direct Subsidized and Unsubsidized Loans, as well as the Graduate PLUS Loan.

9) What are the types of repayment options in Direct Lending?

There are five repayment options: standard, extended, graduated, income contingent repayment, and income-based repayment.

10) How do I contact the Department of Education regarding the Direct Loan program?

Telephone: 800-848-0979
Website: https://studentloans.gov