Seattle Pacific University to Change to Federal Direct Loan Program
Beginning April 1, 2010 Seattle Pacific University will participate in the William D. Ford Federal Direct Loan Program (DL). All new federal Stafford and PLUS loans awarded after April 1st will be Direct Loans. We believe that the Direct Loan program offers a simpler, faster, less expensive, and more reliable source of funding for students and their families.
With Direct Loans, students and parents borrow directly from the U.S. Department of Education instead of through the private banks and lenders who participated in the Federal Family Education Loan Program (FFELP). All other terms and conditions to repay the loan remain the same.
A DL Master Promissory Note (MPN) will be required for all new DL Stafford and PLUS borrowers.
Once a Federal Direct Stafford loan (requires filing a FAFSA) has been awarded, borrowers may complete the new MPN and entrance counseling online. (Entrance Counseling is required only for first time federal Stafford and graduate PLUS borrowers). Students awarded a Direct Loan will need to complete a new MPN with the Direct Loan program, even if a student already has an MPN for a FFELP Stafford; students who have received a Direct Loan at another school will not need to complete another Direct Loan MPN.
PLUS borrowers can complete a PLUS MPN at the Direct Loan MPN website; the parent PLUS authorization is scheduled to be available by April 1st.
Note: US Bank, Key Bank and Bank of America student or parent borrowers with existing FFELP loans for the 2009-2010 academic year and who need funding after March 31st must complete a Direct Loan MPN as well, since these lenders have discontinued participation in the FFELP program as of March 31st.
Reasons SPU Changed to the DL Program
Some changes in the private lending market that informed our decision:
Additional Important Considerations
- Fewer lenders are participating in the FFELP program due to uncertain credit markets and changes in federal law. For example, Bank of America, Key Bank, and US Bank no longer provide FFELP loans.
- Lenders no longer offer considerable discounts or benefits to students.
- The majority of private lenders sell their federal student and parent loans to the Department of Education almost immediately, converting FFELP loans to DL loans.
- DL process is simpler for families; every borrower uses the same application process and is subject to the same loan fees.
- DL offers a secure source of funding for students and families.
- DL Program is cheaper for students and families in the short and long term*.
- Direct Loans are offered through the same department that handles consolidation of federal education loans, the U.S. Department of Education.
- Many other schools in Washington State participate in DL, including the UW, Whitworth University, University of Puget Sound, and Seattle University. In addition a number of schools will be changing to DL for the 2010-11 academic year, such as Gonzaga University, Northwest University, and Pacific Lutheran University.
* The net fee for the Stafford Loan is 0.5 percent through the Direct Loan Program vs. 1.0 percent through FFEL; DL currently offers an up-front interest rate rebate conditional upon receiving the borrower’s first 12 payments on time. The PLUS loan interest rate is 7.9% through the Direct Loan Program, as compared with 8.5% through FFELP; nationwide, there is a higher acceptance rate of PLUS loans in DL than in FFELP. Students are more easily able to qualify for Public Service cancelation benefits. In DL, loans are never sold; nationwide default rates are lower in the DL Program than in FFELP.
Last Updated: 8/2/2010