Fri, Jan 29 2010LeTourneau University will begin processing student loans through the William D. Ford Direct Loan Program that allows students and parents to borrow directly from the federal government rather than borrowing student loans from selected banks or credit unions. LETU’s participation in the Direct Loan program will be effective as early as this summer.
This Direct Loan program is funded by the federal government through the Department of Education and consists of Stafford loans for students and PLUS Loans for parents and graduate and professional degree students. The application for this Direct Loan program is the Free Application for Federal Student Aid (FAFSA) found at www.fafsa.gov.
“LETU students and parents should see minimal change to the processing of their loan funds during the transition from the Federal Family Education Loan (FFEL) to the William D. Ford Direct Loan program,” said Delinda Hall, senior director of Enrollment Services and Financial Aid. “LeTourneau University currently utilizes the technical systems needed to process and fund direct loans when processing the funding of Pell grants. This should be a considerable factor in making a seamless transition from FFEL to Direct Loan.”
An advantage to the Direct Loan program is that it provides a single point of service for the life of the loan. The repayment process for direct loans allows students to access one site (the U.S. Department of Education) when paying on the proceeds of their loans.
“Over the past two years, a large number of private lenders have exited the FFEL program due to volatility in the credit markets, as well as reduced subsidies paid by the federal government,” Hall said. “When this occurred, students were required to select other lenders, which caused a complication of additional processes for the student and LETU’S Financial Aid Office. The move to the Direct Loan program will simplify the process for the student, allowing them to accrue their educational loans with one lender, thus making the repayment process less troublesome.
“LETU came to the decision that the Federal Direct Loan program is the best option for our students for a number of reasons, but primarily because of the stability of funding,” Hall said. She added that other benefits to students include a Public Service Loan Forgiveness program to forgive debt for individuals working in key public service professions like teaching, government and social work, law enforcement, and non-profit 501(c)(3) organizations. It also offers consolidation options of Federal Stafford Loans with new Direct Loans, enabling borrowers to track their loans with one lender instead of multiple lenders.
LETU’s Financial Aid Office will provide additional information and instructions about the William D. Ford Direct Loan Program to students and prospective students in late Spring 2010. In the meantime, several online resources can answer additional questions, including the Department of Education’s Direct Loan site at http://www2.ed.gov/offices/OSFAP/DirectLoan/index.html.