Important Change to Federal Stafford and PLUS Loan Processing for 2009/2010

Effective summer 2009, Stony Brook University is changing its process for obtaining Federal Stafford and PLUS loans by participating exclusively in the William D. Ford Federal Direct Loan Program. 

Prior to summer of 2009, Stony Brook University had been participating in the Federal Family Education Loan (FFEL) program, which required students and parents to select a lender from a list of banks, credit unions, or other financial institutions as the holder of their loan.  Beginning with the summer 2009 semester, the University will be participating exclusively in the William D. Ford Federal Direct Loan program, where the lender will be the federal government.

Q & A's:


How does this change impact me?

If you are a new or a continuing student who plans to borrow a federal Stafford or PLUS loan for the 2009-2010 award year, you will be required to complete a Federal Direct Loan Master Promissory Note, even if you have already completed a Master Promissory Note for the FFEL program in the past.  If your parents are borrowing a parent loan, they too will have to complete a new PLUS Master Promissory Note for the Federal Direct Loan program.

When should I complete the Federal Direct Loan Master Promissory Note (MPN)?

After you accept your loan offer in your 2009-2010 financial aid award package, go to www.dlenote.ed.gov to complete your electronic Master Promissory Note for the Federal Direct Loan.  You will need your federal PIN to confirm your identity.

If I have already completed a Direct Loan MPN for another school, do I need to complete another one for Stony Brook?

No, if you currently have a valid Direct Loan MPN on file, you do not need to complete a new MPN. To retrieve a copy of your MPN, go to www.dlenote.ed.gov.

What are the benefits in the Federal Direct Loan program?

There are more repayment plans through the Federal Direct Loan program, specifically, the income contingent plan.  If a student does not repay their loans in 25 years,the government forgives the balance of the loan.  In addition, the interest never exceeds 10% of the loan principal.

Federal Direct Lending has the new Public Service Loan Forgiveness program that will forgive remaining debt after 10 years of eligible employment and qualifying loan payments for people working in key public service professions such as teaching, government, social work, law enforcement, and non-profit 501(c)(3) organizations.

The current interest rate for the parent and graduate student PLUS loan is 7.9% in the Federal Direct Loan program compared to 8.5% in the FFEL program.

Loans can be sold in FFEL, negating their borrower benefits.  Loans are never sold in the Federal Direct Loan program.  Since borrowing is directly through the federal government, borrowers make loan payments to the Department of Education for the life of their loans. It's "one-stop-shopping" from loan application through repayment.

Currently, only the Federal Direct Loan program is offering consolidation as an option.

Prior FFEL loans can be consolidated in the Federal Direct Loan program.

In the Federal Direct Loan program, there is an upfront rebate that reduces the fee you pay at origination.

Why did Stony Brook University choose to move into the Direct Loan program?

Instability in the credit markets and reductions in government subsidies have caused many lenders to either exit the FFEL program or to stop offering borrower benefits and other services.

The Federal Direct Loan program is not impacted by changes in the economy and provides a more stable loan process. Funds are guaranteed to be available from the U.S. Treasury. 

The Federal Direct Loan program offers students one single source of contact.

Where can I find out more information about the Federal Direct Loan program?

http://www.ed.gov/offices/OSFAP/DirectLoan/student.html 

Where can I find information about my Federal Direct Loan?

The Direct Loan Servicer is the one-stop center for managing your loan.  Visit them on-line at:https://www.dl.ed.gov/borrower/BorrowerWelcomePage.jsp.

If I currently have a loan through the FFEL program, will I have to repay two different lenders?

You have the option of consolidating all of your federal loans either with the Direct Loan program or with any other lender that offers federal consolidation loans.

Where can I find information about my current and prior FFEL program loans?

Information about your federal loans can be accessed via the National Student Loan Data System (NSLDS) at http://www.nslds.ed.gov.  You will need your federal PIN to confirm your identity.

Will my Stafford loans that I borrowed through the FFEL program still be deferred now that Stony Brook University is changing its loan processing?

As long as you are enrolled in school on at least a half time basis, your prior year federal loans will continue to be deferred.

Does this affect my private (alternative) loans?

No, this change only affects federal Stafford and PLUS loans.