Direct Lending for Student Loans

Beginning in the 2010-2011 academic year, EMU will join the William D Ford Federal Direct Student Loan program. Participation in this federal program will result in the processing and disbursing of all student and parent loans through the federal government.

Historically, EMU has participated in the Federal Family Educational Loan Program (FFELP) which used banks, credit unions, and other lending companies to make loans to students and parents. In recent years, increased market volatility due to economic factors and congressional pressures greatly impacted the FFELP and caused many lenders to exit the program.

On March 30, 2010 the Health Care and Education Reconciliation Act of 2010 (HCERA)was signed into law. HCERA mandates that schools use the Direct student loan program starting July 1, 2010 and banks, credit unions, and other lending companies can no longer make federal student loans.

Steps to complete the student loan application

1. Complete the FAFSA at www.fafsa.gov
2. Complete and return the Student Loan Request Form
3. Complete the Master Promissory Note (MPN) and entrance interview at www.studentloans.gov

Steps to complete a federal parent PLUS loan

1. Complete and return the Parent PLUS Loan Request Form
2. Complete the Master Promissory Note (MPN) www.studentloans.gov
3. If you want EMU to complete a credit check with the department of Education before completing a PLUS MPN complete and return the Credit Check Permission Form

Contact info for Direct Loan Services

The Department of Education Direct loan Program Customer Service phone number is 800-848-0979. For information on direct loan account information visit www.dl.ed.gov.

You may also contact EMU financial aid officers with additional questions.

Frequently Asked Questions

Can I keep the same lender I had in previous years?

No, if you borrowed a student Stafford, Parent or Grad PLUS loan you will be required to borrow through the Direct Loan Program. You will need to complete a new MPN and entrance interview.

Will this change affect my ability to borrow private alternative loans?

No, private alternative loans are outside of the Federal loan program. If you wish to borrow an alternative loan you will need to go through the same process you have in the past.

Will I need to complete a new Master Promissory Note (MPN) and entrance interview?

Yes, All EMU students and parents wanting to borrow federal student and parent loans will need to complete a new Master Promissory Note (MPN) and students will need to complete a entrance interview.

What are the differences between FFELP and Direct Loan Program?

The biggest difference between Direct Lending and the FFELP program is where the money comes from. Direct Lending funds comes from the Federal government and loan repayment is to the Federal government. FFELP loan funds come from banks or other lending institutions; the funds are guaranteed by the Federal government and repaid to the banks.

What will happen to my prior student loans now that EMU is using Direct Student Loans?

Loans borrowed from other lenders will need to be repaid based on what the lender indicates. After graduation you can choose to consolidate your Federal loans with the department of Education. For more information about consolidation visit the Department of Educations website: www.loanconsolidation.ed.gov