New Financial Aid Loan Updates
Schoolcraft Changes to the Federal Direct Student Loan Program
Beginning with the summer 2009 semester, Schoolcraft will participate in the William D. Ford Federal Direct Loan Program. This means that students will now receive Stafford Loans directly through the U.S. Department of Education.\
Student Loan requests will no longer be processed through banks or student loan companies.
Reason for switching from the Federal Family Education Loan Program (FEELP) to Direct Lending.
The liquidity problems in the credit market and changes in Federal law have reduced the number of private lenders offering Federal Stafford loans. In addition, due to changes in Federal law, banks and other private lenders can no longer afford to offer the discounts and incentives that previously made it preferable to borrow from them vs. the Department of Education.
“It is important that students have access to loan funding for their educational needs”. We believe by switching to the Direct Loan Program this can ensure that Schoolcraft students will be able borrow loan funds when needed. With the Direct Loan Program, subsidized/unsubsidized loans will remain the same. Students receive the same amount of loan funds, it is only where the money comes from that will be different.
The following Q&A can provide answers to some commonly asked questions concerning Schoolcraft’s change to the Direct Loan Program.
Q. What are some of the Differences between FFELP and the Federal Direct Loan Program?
A. In the DL program, the U.S. Department of Education acts as a lender, providing funds to the school for Stafford subsidized/unsubsidized and parent loans, and with FFELP, students chose a bank or lender to apply for loans.
Advantages for switching to the DL program
- Simpler process for families as every borrower uses the same application process and is subject to the same loan fees.
- Students are no longer required to select a bank or other lending institution to request loan funds.
- Ensures the availability of funds for families.
- Students will have one Lender
- Same PIN number is used for filing the FAFSA accessing all federal loan debt and for the Servicing Center website.
- No guarantee fee; net origination fee of 1%
- May change repayment plans at any time with no restrictions
- Offers loans through the same department that handles consolidation of student loans
Q. If I’d previously received a Stafford Loan through a bank; do I have to change to the Direct Loan Program?
A. Yes, all students requesting student loan funds for the 2009-10 school year will need to apply for the loan through the Direct Loan Program.
Q. Who should I contact with additional questions about Schoolcraft’s change to the Direct Loan Program?
A. Contact the Office of Financial Aid at (734) 462-4433, or stop into McDowell room MC260 to speak with a Student Loan Specialist.
