William D. Ford Federal Direct Loan

Previously, Carlow University and many other colleges and universities processed Stafford and PLUS Loans using the Federal Family Education Loan Program (FFELP).  New for the 2010-2011 academic year, FFELP has been replaced with the William D. Ford Federal Direct Loan.  This is a result of the Student Aid and Fiscal Responsibility Act (SAFRA) that Congress passed on March 25, 2010.  All schools must now participate in the Direct Loan Program. Loan funds will no longer come from banks and other financial institutions.  Direct loans are funded through the U.S. Department of Education using funds obtained from the U.S. Treasury. 

Frequently Asked Questions (William D. Ford Federal Direct Loan)

1. What is the difference between the Direct Loan Program and the Federal Family Education Loan Program?  The major difference is the source of loan funding. Also, Direct Loans offer student and parent borrowers one point of contact – the Department of Education. There are also some differences in the interest rate, fees and repayment options.

2. Will I be able to borrow through the same lender as last year?  No.  If you borrow a federal student loan for 2010-2011, you will be required to borrow through the Federal Direct Loan Program.  The Stafford Loan program is no longer an option.

3. Will I have to fill out a new Master Promissory Note for 2010-2011?  Yes, all new and previous borrowers must complete a Federal Direct Master Promissory Note which is available at www.studentloans.gov.

4. I already completed Entrance Counseling when I borrowed a Stafford Loan for the first time.  Do I have to complete new Entrance Counseling too?No, previous borrowers who completed Stafford Loan Entrance Counseling do not have to complete Direct Loan Entrance Counseling.  But, new borrowers must complete Direct Loan Entrance Counseling which is available at www.studentloans.gov.

5. If I have loans through FFELP and now I borrow loans through the Direct Loan program, will I have to repay two different lenders?  Yes, loans you borrowed previously will be serviced by the lender/servicer you selected when you signed your original Master Promissory Note.  However, many loans were already sold to the Department of Education so you may end up repaying a different servicer/lender than the one from which you originally borrowed.  After you graduate you may choose to make individual payments to your previous lender(s) and the Department of Education for your Direct Loans, or you may choose to consolidate your loans into one payment with the Department of Education.  For more information about loan consolidation, visit www.loanconsolidation.ed.gov.

6. How do graduate students and parent borrowers apply for PLUS under the Direct Loan Program?  PLUS borrowers must complete a Direct PLUS Master Promissory Note at www.studentloans.gov. Graduate students must also complete loan counseling which is available at the same site.

7. What are the interest rates and fees charged under the Direct Loan program?

* By law the total origination fee on the Federal Direct Student Loan is 1.5%.  However, Direct Loans offer a 1.0% up-front rebate on this origination fee.  If the student borrower fails to make 12 on-time monthly payments, the up-front rebate will be removed and the principal balance owed will be recalculated with the original 1.5% origination fee.

By law, the total origination fee on the Federal Direct Plus Loan is 4.0%.  However, Direct Loans offer a 1.5% up-front rebate on this origination fee.  If the parent or student borrower fails to make 12 on-time monthly payments, the up-front rebate will be removed and the principal balance owed will be recalculated with the original 4.0% origination fee.

8. Will the Stafford Loans I borrowed previously be deferred now that my new loans are Direct?  Yes, as long as you are enrolled on at least a half-time basis your loans will continue to be deferred.  Enrollment information will continue to be reported to lenders on a regular basis using the National Student Clearinghouse.

9. How do the Direct Loan repayment options differ from the repayment options offered with FFELP?  All repayment options offered to FFELP borrowers are available for Direct Loan borrowers, with the exception of the Income Contingent Repayment, which is available only in Direct Loans.  There are five repayment options available for Direct Loans; Standard, Extended, Graduated, Income Contingent and Income-Based.  More information is available at www.direct.ed.gov/RepayCalc/dlindex2.html.

10. How do I contact the Department of Education’s Direct Loan Customer Service? The phone number is 1-800-848-0979 and their office hours are 8:00 AM to 8:00 PM Eastern Standard Time, Monday – Friday.

Perkins Loan
Perkins is a low-interest loan available to degree-seeking. Currently at 5 percent interest, the loan is repaid starting nine months after the student graduates, leaves school or drops below half time. Eligible students must be admitted and enrolled at least half time. This loan program is administered by Carlow University in accordance with guidelines established by the U.S. Department of Education. To apply for the Federal Perkins Loan, students must complete the FAFSA and submit any documents that may be requested by the Financial Aid Office.

Nursing Loan
Funded by the U.S. Department of Health and Human Services, this program is intended to assist students achieve careers in nursing. Currently at 5 percent interest, this loan is awarded to nursing students enrolled at least halftime who demonstrate financial need. The loan is repaid starting nine months after the student graduates, leaves school, drops below half time, or changes from Nursing to another major. To apply for a Nursing Loan, students must complete the FAFSA and submit any documents that may be requested by the Financial Aid Office.

If you have any questions, please contact the Financial Aid Office at:

Carlow University
Financial Aid Office
Antonian Hall Annex

Phone: 412-578-6389
Fax: 412-578-6689
E-mail: finaid@carlow.edu

Back to top