Direct Lending FAQs

What are Federal Direct Loans (DL)?

Federal Direct Loans are Stafford and PLUS Loans. They are called “Direct Loans” because the funding for these loans comes directly from the U.S. Treasury.

Why is Emerson switching to Federal Direct Loans?

To assist students and their family in obtaining federal loans, Emerson College is switching to the Federal Direct Loan Program beginning in the 2010–2011 academic year.

Emerson had been a participant in the Federal Family Educational Loan Program (FFEL) since 1999. Due to recent changes made by Congress to the FFEL program, coupled with the current economic climate and a significant number of lenders leaving the FFEL program, we feel this change is in the best interest of our students and their parents.

The Federal Direct Loan program offers a stable source of student loan funding as it is not impacted by changes in our economy. The loan funds are provided by the U.S. Treasury, not by private lending institutions. In addition, loans under the Federal Direct lending are not sold; the program provides one lender and one repayment for Direct Loans.

I don’t want to switch lenders. Can I choose to stay with my current Stafford/PLUS lender?

No. If you want a Stafford Loan or a PLUS loan for the 2010–2011 academic year (including summer 2010), you must acquire the loan through the Direct Lending program. Emerson College’s participation in the Direct Loan program means that all federal loans for Emerson students and parents must be processed through the program.

What do I have to do to obtain a Stafford Loan under the new program?

All students who wish to take out a Stafford Loan will have to complete a new Master Promissory Note (MPN). Even if you already completed one with a prior lender, you have to complete a new Direct Loan MPN.

You will receive instructions via email and U.S. Mail from our office on how to complete the MPN process online. You will need your FAFSA PIN to complete the online Direct Loan MPN.

You will be offered a Stafford Loan on your 2010–2011 Emerson College Financial Assistance Award Statement. Once you sign the Financial Assistance Award Statement accepting the loan, the College will process your loan through the Direct Loan program. The funds will disburse to your student account once the semester begins.

What are the interest rates and fees for Direct Loans?

The interest rate and fees are different under Direct Loans. Starting July 1, 2010:

* Direct Loans offer a 0.5% rebate on Direct Stafford Loans and a 1.5% rebate on Direct PLUS loans. The rebate is given to the borrower when the loan is disbursed to lower the upfront fees. It is contingent on the borrower making his or her first 12 payments on time. If the borrower fails to make his or her first 12 payments on time, then the previously rebated amount is added to the principal of the loan.

Do I have to do another entrance interview?

No, if you have borrowed a Stafford or Graduate PLUS in the past, you do not have to complete another Entrance Interview. If you are borrowing for the first time at Emerson, then you will be contacted to complete an Entrance Interview.

What happens to my existing loans from the FFEL program?

Any previous loans you borrowed through the FFEL program will be serviced by the lender/servicer you selected when you signed your original MPN. Many FFEL loans were sold to the Department of Education, so pay close attention to any letters and mailings you may have received.

After graduation, you have a choice to make FFEL payments to your previous lender(s) and Direct Loan payments to the Department of Education, or you can consolidate your loans into one payment with the Department of Education. Please visit the Department of Education's website for more information.

Do my repayment options change?

The Direct Loan program offers more repayment options than the FFEL program. Under Direct Lending, there are five repayment options. Learn more about the options, including the new Income-Based Repayment (IBR) and the Public Service Loan Forgiveness Program on the Federal Student Aid website.

How does this affect parent borrowers of Parent PLUS Loans?

Under the Federal Direct PLUS loan program, parents may borrow up to the full cost of their student’s education minus any other financial aid received. Credit checks are required just as they were through the FFEL program.

Parents cannot apply through any lender other than the Department of Education. Applying through multiple lenders will cause unnecessary hits on your parents’ credit report and delay the loan’s processing.
Learn more about the Direct Parent PLUS loan and how to apply »

How does this affect graduate students wishing to borrow Graduate PLUS Loans?

The Federal Direct Graduate PLUS Loan may be used to borrow up to the full cost of education minus any other financial aid received. Credit checks are required just as they were through the FFEL program.

You cannot apply through any lender other than the Department of Education. Applying through multiple lenders will cause unnecessary hits on your credit report and delay processing of your loan.
Learn more about the Graduate PLUS loan and how to apply »

How can I get more information on Direct Lending?

For more information on the Federal Direct Loan program, please visit the Department of Education’s website.