- What are the differences between the Direct Loan Program and the Federal Family Education Loan Program (FFELP)?
- How does the Direct Loan transition affect student loan borrowers (who had prior FFELP loans)?
- I had FFELP loans before. Will I still be able to borrow from the same lender as under FFELP?
- If I borrowed Federal Stafford, PLUS, and/or Graduate PLUS loans in prior years and I borrow loans now, will I have to repay two different lenders?
- How can I find out who services my federal loans?
- I am a returning student with 1 prior FFELP loan. Will my current Master Promissory Note (MPN) remain in effect or will I have to complete a new MPN?
- How do the Direct Loan repayment options differ from FFELP?
- Will the Stafford and Graduate PLUS Loans I borrowed through my lender in prior years still be eligible for in-school deferment?
- How and when do I complete a Direct Loan Master Promissory Note (MPN)?
- Do I need to complete a Direct Loan MPN every academic year?
- What is an upfront rebate?
- Do Direct Loans offer in-school deferment for graduate/professional student Direct Graduate PLUS Loan borrowers?
- Does the Direct Loan Program offer an extended repayment plan or options to defer payment?
- How does Direct Loan Servicing capitalize interest?
- How do I apply for a Parent PLUS loan?
- How can I obtain more information about Direct Loans or contact Direct Loan Customer Service?
What are the differences between the Direct Loan Program and the Federal Family Education Loan Program (FFELP)?
In 2010-2011, Direct Lending replaced the former FFEL program. The most important difference is that Direct Loans are funded through the U.S. Department of Education using funds obtained from the U.S. Treasury. This program offers students a single point of contact because the loans are made, backed, and serviced by the U.S. Department of Education. In the FFEL program, funds came from banks and other lending institutions, creating multiple points of contact for students. There are also some differences in interest rates, fees and repayment options between the Direct Loan Program and FFELP; these are explained below.
- Students no longer select a third-party lender for their federal loans.
- All loan borrowers (new and returning) must complete a new Master Promissory Note (MPN)
- MPNs signed prior to 2010 in the FFEL program are not valid within the Direct Loan program. New Direct Loan MPNs are necessary beginning in the 2010-11 academic year.
- Parent Loan (PLUS) and Graduate PLUS borrowers no longer need to apply with private lenders. Do not complete a PLUS Loan pre-approval with a private lender.
- Continuing Direct and PLUS loan borrowers who began to borrow prior to the 2010-2011 academic year will have split loan servicing in repayment, between FFELP and Direct Loans. Direct Loans will be serviced by the Department of Education and the current holder of any FFELP loans will service loans previously borrowed. Loan consolidation with the Department of Education allows for one single payment.
- Terms and conditions of Direct Loans, in-school deferments and grace periods mirror the FFEL program.
The process for credit-based private educational loans remains unchanged.
No. If you borrow a Federal Direct, Federal Parent PLUS or Federal Graduate PLUS loan for or after the 2010-2011 academic year, you will be required to borrow through the Direct Loan program. This change will require you to complete a new Master Promissory Note (MPN).
If I borrowed Federal Stafford, PLUS, and/or Graduate PLUS loans in prior years and I borrow loans now, will I have to repay two different lenders?
After graduation you have a choice to make individual payments to your previous lender(s) and to the U.S. Department of Education for your Direct Loans, or you can consolidate your loans into one payment with the U.S. Department of Education. For more information regarding Loan Consolidation please visit the U.S. Department of Education's website.
Information regarding your federal loan debt can be accessed via the National Student Loan Data System (NSLDS). Note that any private (alternative) loans you have borrowed will not appear in the NSLDS.
I am a returning student with one prior FFELP loan. Will my current Master Promissory Note (MPN) remain in effect or will I have to complete a new MPN?
You will need to sign a new Direct Loan Master Promissory Note (MPN) because you will be borrowing from a new lender, the U.S. Department of Education. To electronically sign your new MPN, you will need to have your federal PIN number that you used to complete your FAFSA.
- Income Contingent Repayment
- Income-Based Repayment
Will the Stafford and Graduate PLUS Loans I borrowed through my lender in prior years still be eligible for in-school deferment?
Yes. If you are enrolled at least half-time, your prior federal loans will continue to be deferred. The Direct Loan Program offers the same deferment and forbearance provisions as FFELP.
In prior years, student and parent borrowers logged in using a federal PIN, but effective May 10, 2015, an FSA ID replaces the PIN. If you do not have an FSA ID, the website will prompt you to create one. Note that it may take up to three days for the system to verify your identity when you create a new FSA ID.
Upfront rebates, available to Direct Loan borrowers, are designed to provide an incentive for on-time payments and effectively reduce the origination fee charged. Borrowers receive a percentage (0.5% - 1.5%) of their loan amount up front, on the condition that they make the first 12 required monthly payments on time when loan repayment begins.
Upfront rebate percents by loan type:
- Direct Loan (Subsidized): 0.5%
- Direct Loan (Unsubsidized): 0.5%
- Direct Loan Plus: 1.5%
Do Direct Loans offer in-school deferment for graduate/professional student Direct Graduate PLUS Loan borrowers?
The Direct Loan Program also offers the same deferments that were available to borrowers in FFELP. The maximum period for which a borrower may receive a deferment is determined in accordance with the Direct Loan Program regulations, and depends on the deferment type. Information about deferments is available on the Department of Education website.
You can visit or contact StudentlLoans.gov at the following phone numbers:
- Applicant Services (PLUS borrowers): Open 8:00 AM to 11:00 PM ET, Monday through Friday. The phone number is 800-557-7394.
- Student Loan Support Center: Open 8:00 AM to 11:00 PM ET, Monday through Friday. The phone number is 800-557-7394.