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
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.
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.
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.
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?