Why is Saint Mary’s College of California changing to the Direct Loan Program?
The Health Care and Education Reconciliation Act of 2010 (HCERA), which, among other things, made significant changes
to the federal student loans programs authorized by Title IV of the Higher Education Act of 1965. Beginning July 1, 2010,
the Federal Family Education Loan Program will be terminated and all new Stafford, Graduate PLUS, Parent PLUS, and
Consolidation loans can only be made under the William D. Ford Federal Direct Loan (Direct Loan) Program.
The Federal Direct Loan Program provides a stable source of student loan funding because the U.S. Treasury provides
The Direct Loan Program is not impacted by changes in the economy.
The Direct Loan Program provides a single point of contact for managing student loans.
Loans are never sold in the Direct Loan Program. Loans through lenders can be sold multiple times which can be
confusing for the borrower upon repayment.
Direct Lending offers a more lenient credit assessment for Grad PLUS and Parent PLUS loan programs.
What is the difference between the Direct Loan Program and the Federal Family Education Loan Program
The most important difference between Direct Lending and the FFEL Program is the source of loan funding. Direct loans
are funded through the U.S. Department of Education using funds obtained from the U.S. Treasury. This program offers
students and parents one point of contact because the loans are made, backed, and serviced by the U.S. Department of
Education. In the FFEL Program, funds come from banks and lenders creating multiple points of contact for students.
There are also some differences in interest rate, fees and repayment options which make the Direct Loan Program more
beneficial for borrowers.
Will I still be able to continue borrowing through the same lender as last year?
No, if you borrow a Federal Stafford, Federal Parent PLUS or Federal Grad PLUS loan for the 2010-2011 academic year,