Beginning with Summer School 2010, UW-Platteville will participate exclusively in the Federal Direct Loan (subsidized and unsubsidized student loans), Federal Parent PLUS Direct Loan, and Federal Grad PLUS Direct Loan programs. Students and parents will use the Direct Loan program for all federal student and parent loans.
The traditional Federal Family Educational Loan Program (FFELP) loans (i.e., Stafford Loan, Parent PLUS Loan, and Grad PLUS Loan) through banks, credit unions, and other student loan lending companies will no longer be processed at UWP. Under the Federal Direct Loan program students will borrow from the federal government and lenders are eliminated from the picture.
As a result of many legislative changes over the past few years, as well as recent economic issues, it has been difficult for our students to stay with their FFELP lenders and in some cases find a FFELP lender to secure their loans. Additionally, many FFELP loans are being sold by lenders to the federal government. We are making this change so our students and parents will have federal loans available to them. We anticipate that this will be a more straight forward process for students and parents.
The Direct Loan program has been in existence since the early 1990's, so at this time UWP is joining an established loan program in order to continue to serve our students and parents.
We have compiled a list of questions and answers that should be helpful.
The biggest difference between the Federal Direct Loan Program and the FFELP is the source of funding. Direct Loans are funded through the U.S. Department of Education using funds from the U.S. Treasury. This program offers students and parents one point of contact. The FFEL program had funds coming from private lenders.
You must complete the Free Application for Federal Student Aid (FAFSA) and accept your Federal Direct Loans that are offered on your financial aid award notification.
No, as the U.S. Department of Education is the only lender in Direct Lending.
Yes, you must complete a new Master Promissory Note (MPN) because the U.S. Department of Education will be your new lender.
Yes! You can complete your Direct Loan MPN online at http://dlenote.ed.gov You will need your FAFSA pin number to sign the note electronically. If you do not have a pin, you may obtain one at http://pin.ed.gov
Interest: The interest rate for the Federal Subsidized Direct Loan for undergraduates will be 4.5% for loans disbursed between July 1, 2010 and June 30, 2011. The interest rate for the Unsubsidized Direct Loan is fixed at 6.8%. The interest rate for graduate students is 6.8% on subsidized and unsubsidized loans.
Origination fee: The origination fee for Federal Direct Subsidized and unsubsidized loan is 1% for loans disbursed after July 1, 2010. The origination fee is retained by the federal government to reduce the cost of supporting these low interest loans; however .5% of the fee is rebated upfront to the student at the time the loan is disbursed. When loan repayment begins, the student must make the first 12 loan payments on time; otherwise the amount rebated will be reversed and charged back to the total loan amount owed.
The Federal Direct Parent Plus Loan has a 4% origination fee and also offers a 1.5% rebate on the origination fee, resulting in a net fee of 2.5%, which will be deducted from the amount borrowed. The 12 on time payments applies to the PLUS in order to keep the rebate.
No, you will not have to complete entrance counseling if you had completed it under FFELP. Only new borrowers will be required to complete entrance counseling.
Any previous federal loan (Stafford or PLUS) you borrowed from a lender will be serviced by the lender/servicer you selected when you signed your Master Promissory Note (MPN) for those loans. After graduation you will have the choice to consolidate into one payment with the Department of Education. This is called a Consolidation Loan.
As long as you are enrolled in school at least half-time your prior federal loans will continue to be deferred. Enrollment information is reported to lenders by the school on a regular basis.
Under the Federal Direct PLUS loan parents will be borrowing through the U.S. Department of Education also. Parents cannot apply through any other lender. A credit check is required however the Direct PLUS uses a much more lenient credit assessment. We require parents to complete the UW-Platteville PLUS request form to start the process of applying for a Federal PLUS Direct Loan. This form will be available on our website after April 1, 2010.