Direct Loan Program
- Why did the United States Sports Academy enter the Direct Loans Program?
- Federal Direct Lending provides the most stable source of loan funding available because the funds are provided directly by the U.S. Treasury. The instability of the debt markets, and uncertainty with what will happen next, strongly influenced our decision to find the most secure solution possible. While there are many private lenders still in the FFELP program, we were concerned about future developments that could negatively impact students, who were already impacted by the turmoil over the last year. The Direct Loan program provides certainty that access to student loans will not be a problem in the future.
- What are the primary differences between Direct Loans (DL) and the Federal Family Education Loan Program (FFELP?)
- The primary difference is the source of the loan funding. Direct Loans come straight from the U. S. Department of Education using funds obtained from the U.S. Treasury. This program offers students one single source of contact since the loans are made, guaranteed and serviced by the U.S. Department of Education. In the FFEL Program the lender, guarantor, and servicer can involve any combination of banks and agencies across the country. It is often the case that the student’s lender will sell their loan to another lender or loan servicer. This can add complexity for students, especially in the event an error or problem in the processing of their loans should occur. The student and the school must first find out who is processing and servicing the loan to even begin to solve a problem. Under DL, there is a single point of contact for students and their school to turn to with any problems that might arise.
- What is the interest rate and fees charged in DL compared to FFELP?
- 2009-2010 Interest Rate Comparison table (for loans disbursed on or after July 1, 2009)
|Type of Loan
|Federal Subsidized Stafford
|Federal Subsidized Stafford for graduate students
|Federal Unsubsidized Stafford for all students
- How do I apply for the Direct Loan?
- The process is similar to what you have used in the past. Students complete the federal application (FAFSA). The Academy will then review your application and notify you of your eligibility for the loan and the maximum amount you can receive. You will “accept” the loan but this time, you will not select a lender. Instead, you will sign your note with the U.S. Department of Education as your lender. You only need to sign once; as you request loans for subsequent years, the loans will be added to your Master Promissory Note. After your note is signed, the Academy will request the Department of Education to send your funds for the semester and we will put the loan funds into your student account.
- What are the benefits in the Direct Loan Program?
- There are several benefits in the DL Program:
- A guaranteed source of funding for student loans.
- The option of an income- contingent repayment plan or an income-based repayment plan when you enter repayment. This means you will have the option of ensuring that your loan repayment amount will always be affordable based on what your income will allow.
- Students in the Direct Loan program who enter into public service jobs can have any remaining balance on their loans forgiven after ten years of public service work. (While this option does not exist in the FFEL program, students who borrowed in that program can consolidate their loans into the DL program in order to take advantage of this forgiveness program.)
- Most lenders offer benefits during repayment after a student makes payments from 2 to 4 years. Very few students end up receiving those benefits. In DL, students earn benefits after only 1 year.
- Should a student make payments late under DL, the late fees charged are less than the late fees charged in the FFEL Program.
- Why can’t I have a choice in which lender to use for my student loans?
- Most students tell us that they just want to know that their student loans will be there for them and are not too concerned with who the lender is. Since fewer banks will continue to offer any discounts or benefits while you are in school, the best time for students to exercise a choice is when they enter repayment. A student can always choose to consolidate their loans with any lender they wish during repayment. That is the time for students to shop around for the best deal.
- What happens if some of my federal student loans are from a lender and now part of my loans will be through the Department of Education?
- The source of the loan application and funding is semester and year specific. The combination of FFELP and DL loans is not unusual. In the case of the Direct Loan program, since the choice to participate in either FFELP or DL is a decision that each school must make, it already happens that a student could have loans in both programs. This is the case for students who begin their education at a school that uses the DL program and then transfers to a school using the FFEL Program; that student would have loans with each program. Many of our transfer and graduate students already have this combination. In order to make repayment to one source once repayment starts, many students take out a consolidation loan which combines both types of loans into a single loan.
- How does the consolidation process work?
- Once a student graduates or chooses to no longer attend school on a half time basis, the student can contact the Direct Loan program for an application for a Direct Consolidation Loan, which will combine the FFELP and DL loans into one type of loan. When it comes time to begin repaying your loans, you will be provided with several options concerning consolidation and you will be able to choose which one has the greatest advantage for you. Students can move all their loans to DL or they can move all their loans to FFELP. The choice will be yours.
- How will my student loans disbursements be affected?
- USSA will disburse the student loans in two disbursements per term. The first one at the time attendance is verified and the second when you have reached the fifty percent (50%) mark of the term.
- Will other student aid programs such as state grants be affected by what is happening with student loans?
- No, those programs are not affected.
- Do I have to complete another Master Promissory Note (MPN)?
- Yes, you must sign a new Direct Loan Master Promissory Note because you will now be borrowing from a new lender, the federal government. This will be the last promissory note you will have to sign as long as you continue to attend the Academy. The Federal Direct Loan Master Promissory Note (MPN) process is completed online at: https://dlenote.ed.gov/empn/index.jsp. You will be required to use your U.S. Department of Education issued PIN to complete an electronic MPN.
- Do I have to complete another Entrance Counseling session?
- Yes, you must complete Direct Loan Entrance Counseling because you will now be borrowing from a new lender, the federal government. This can be done online at https://www.dl.ed.gov/borrower/CounselingSessions.do?cmd=initializeContext.
- If I have already completed a Direct Loan Master Promissory Note for another school, do I have to complete another one for the Academy?
- You will not have to complete a new Direct Loan MPN if the MPN you signed while attending another school is still active. Contact the Student Applicant Service Center at 1-800-557-7394 to verify the status of your prior Direct Loan MPN.
- When I change from the Federal Family Educational Loan Program (FFELP) to the Direct Loan program will my FFELP loans go into repayment?
- No, your other loans will not go into repayment as long as you remain enrolled at least half-time.
- When do I have to complete an Exit Counseling session?
- Before you withdraw, graduate, or drop below half-time attendance (regardless if you plan to transfer to another school), regulations require that you complete an exit counseling session.
For additional information on the Federal Direct Loan Program or for questions about financial aid, contact the Financial Aid Office at 251-626-3303 or email@example.com.