Northwestern Adopts Direct Student Loan Program
Joins thousands of universities in the William D. Ford Federal Direct Student Loan ProgramFebruary 9, 2010 | by Pat Vaughan Tremmel
EVANSTON, Ill. --- Beginning with the 2010-11 academic year, Northwestern University students and parents will borrow their federal loans directly from the federal government, instead of through the Federal Family Education Loan Program (FFELP), which uses multiple private banks and credit unions.
Northwestern Stafford, PLUS and Grad PLUS borrowers will receive their federal loans through one lender, the U.S. Department of Education.
“This makes for a much more efficient process for our borrowers,” said Carolyn Lindley, University director of financial aid at Northwestern. “And, given the recent turmoil in the financial markets, we believe that the direct loan program will provide our students with continuity of services.”
Northwestern has participated in the FFEL program since the 1970s. The changing economic climate has caused a number of banks to withdraw from the FFEL program completely. Pending Congressional legislation, if passed, could eliminate FFELP and require all colleges and universities to participate in the federal direct lending program.
The application process for the new program is similar to the one now in place and should be relatively seamless to borrowers. In addition, the direct loan program will provide easier tracking of loans, more flexibility in repayment plans and enhanced loan forgiveness for students who work in public service professions.
The interest rates for the Federal Subsidized and Unsubsidized Stafford loans remain the same in the direct loan program. Graduate students and parents of undergraduate students will benefit from a lower interest rate for Grad PLUS and Parent PLUS Direct loans, 7.9 percent compared with 8.5 percent for the FFEL program.
“Northwestern is committed to helping our students meet their educational expenses, and we believe that participation in the William D. Ford Federal Direct Loan Program will provide our parents and students with the resources to do so,” Lindley said.
Information on Northwestern’s participation in the William D. Ford Federal Direct Loan program, with answers to anticipated questions, is provided at http://ug-finaid.northwestern.edu.