Emerson to participate in Federal Direct Loan Program

<strong>Contact: Andy Tiedemann, 617.824.8541</strong>
February 23, 2010

Emerson College has announced its intention to participate in the Federal Direct Loan Program beginning in the upcoming 2010–2011 academic year. Since 1999, Emerson had been a participant in the Federal Family Educational Loan Program (FFEL). Under that program, Emerson students borrowed Federal Stafford Loans and Federal Graduate PLUS Loans, and parents could borrow Federal Parent PLUS Loans. Due to recent changes by Congress made to the Federal Family Educational Loan Program, coupled with the current economic climate and a significant number of lenders leaving the program, Emerson decided to switch to the Federal Direct Loan Program.

“We believe this change is in the best interest of our students and their parents,” said Michelle Smith, director of administrative services. “The Federal Direct Loan program offers a stable source of student loan funding that is not impacted by changes in our economy. The loan funds are provided by the U.S. Treasury and not by private lending institutions,” she said.

Under the terms of the Federal Direct Loan Program, loans will not be sold to third parties, which currently can happen under the FFEL program, leaving borrowers to make payments to lenders other than those from which they initially borrowed.

Student Financial Services will be holding information sessions and hands on Master Promissory Note workshops during March and April to assist current Emerson students with the Direct Lending process. Information will be posted on eCommon and at the Student Service Center.

For more information, please read the following fact sheet or visit www.emerson.edu/finaid.


About Emerson College

Located on Boston Common in the heart of the city’s Theatre District, Emerson is the only four-year private college in the United States devoted to communication and the arts. With 3,453 undergraduates and 837 graduate students from across the United States and 40 countries, Emerson is teaching the next generation of leaders in communication and the arts. Supported by state-of-the-art facilities and a renowned faculty, students participate in more than 60 student organizations and performance groups, 15 NCAA teams, student publications, honor societies, television stations including the Emerson Channel, and WERS-FM, Boston’s award-winning noncommercial radio station.

The College is internationally known for its study and internship programs in Los Angeles, Washington, D.C., the Netherlands, Taiwan, and the Czech Republic.


Emerson College: Frequently Asked Questions Regarding Federal Direct Loans

Contact: Michelle Smith, Director of Student Administrative Services, 617-824-8655

As of February 23, 2010

1. What are Federal Direct Loans (DL)?
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. Under the FFEL program, private lenders loaned the money to students and parents for Stafford and PLUS loans.

2. Why is Emerson switching to Federal Direct Loans?
Emerson College is switching to the Federal Direct Loan Program beginning for the 2010-2011 academic year. Emerson has been a participant in the Federal Family Educational Loan Program (FFEL) from 1999 through this current academic year. Due to recent changes by Congress made to the FFEL program, coupled with the current economic climate and a significant number of lenders leaving the FFEL program, the College feels 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 that is not impacted by changes in the 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 to other lenders. Currently loans under the FFEL program can be sold to other institutions, so students may not be repaying the lender they initially borrowed from.

3. 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.

4. What do I have to do to obtain a Stafford Loan under the new program?
Initially all students wishing to take 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.

5. What are the interest rates and fees for Direct Loans?
The interest rate and fees are different under the DL than they are under the current FFEL program. Starting July 1, 2010:

Loan Type

Interest Rate for 2010-11

Origination Fees using rebate*

Subsidized Stafford Loans for Undergraduate Students

4.5%

0.5%

Subsidized Stafford Loan for Graduate Students

6.8

0.5%

Unsubsidized Loans for ALL students

6.8

0.5%

PLUS Loans for Graduate Students and Parents

7.9

2.5%

* Direct Loans offer a .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 their first 12 payments on time. If the borrower fails to make their first 12 payments on time then the previously rebated amount is added to the principal of the loan.

6. 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.

7. 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 about Loan Consolidation.

8. Do my repayment options change?
The Direct Loan Program offers more repayment options than the FFEL program. Under Direct Lending there are 5 repayment options. Please read more about the options including the new Income-Based Repayment (IBR) and the Public Service Loan Forgiveness Program at Student Aid on the Web.

9. 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. Beginning May 1, Direct Parent PLUS loan application instructions will be provided on Emerson’s website.

10. 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. Beginning May 1, Direct Graduate PLUS loan application instructions will be provided on Emerson’s website.

11. 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 or Emerson's financial aid webpage.

Glenn

Communication Studies Professor Phillip Glenn

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