Frequently Asked Questions (FAQ)

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.


How does the Direct Loan transition affect student loan borrowers who have prior FFELP loans?

While the transition does not affect borrower eligibility, there are some important procedural changes to be aware of:
  • 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.

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I had FFELP loans before. Will I still be able to borrow from the same lender as under FFELP?

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?

Yes.  You will likely be repaying your federal loans to different servicers.  One or more servicers will be associated with the FFELP loans you received prior to the 2010-11 academic year and your Direct Loan will have a servicer as well. You will receive correspondence and payment information from both the Department of Education and your prior lender or servicer.

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.

How can I find out who services my federal loans?

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.

How do the Direct Loan repayment options differ from FFELP?

All repayment options offered to FFELP borrowers are also available for Direct Loan Borrowers, with the exception of Income Contingent Repayment, which is only available in Direct Loans and FFELP loans consolidated under Direct Lending.  There are five repayment plans available for Direct Loans.
  • Standard
  • Extended
  • Graduated
  • 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.


How and when do I complete a Direct Loan Master Promissory Note (MPN)?

Your award notice will include instructions on completing the MPN(s) online for your loan(s). You will need to have the the FSA ID PIN that you used to complete your FAFSA in order to electronically sign the MPN.

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.

Do I need to complete a Direct Loan MPN every academic year?

No, you do not need to complete a MPN each year. Once you have signed your Direct loan MPN, it can be used to borrow additional Direct Loans for up to 10 years.

What is an upfront rebate?

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?

Yes. Graduate and professional students who have Direct Graduate PLUS Loans are placed into an in-school deferment status based on the information reported by schools through the Enrollment Reporting process.

Does the Direct Loan Program offer an extended repayment plan or options to defer payment?

Yes. The Direct Loan Program offers an extended repayment plan as one of five repayment options. Detailed information about repayment plans is available on the Department of Education website.

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.


How does Direct Loan Servicing capitalize interest?

Direct Loan Servicing capitalizes all unpaid interest:

How do I apply for a Parent PLUS loan?

Under the Federal Direct PLUS loan program parents may borrow up to the full cost of their student's education minus other financial aid received.  Credit checks  are required. Since the credit approval for the PLUS Loan is only valid for 90 days, families should consult with the individual school financial aid­ office - undergraduate or graduate - before applying.

How can I obtain more information about Direct Loans or contact Direct Loan Customer Service?

You can visit or contact 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.