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William D. Ford Federal Direct Loan Program

Direct Lending FAQ

Links To Learn More

Texas Chiropractic College will be participating in the William D. Ford Federal Direct Loan program for the 2010-2011 academic year. Currently the College participates in the Federal Family Education Loan Program (FFELP) in which the students borrow from private banks and lenders.

We believe that the Federal Direct Loan program will offer our students a more stable, streamlined, and predictable borrowing experience. Texas Chiropractic College's participation in the Federal Direct Loan Program will ensure that the students will continue to have access to low-cost federal educational loans. It will also mitigate the potential impact of the current credit issues affecting private lenders of federal educational loans.

Benefits of Federal Direct Lending:

  • A guaranteed source of funding for student loans. Funds are provided by the U.S. Treasury.
  • The Federal Direct Plus Loan interest rate is 7.9% in comparison to the FFELP Plus Loan rate of 8.5%. This is considerable cost savings for our many graduate students who are currently borrowing Plus Loans through private lenders.
  • Students will use a PIN for many of their Financial Aid needs including completing a FASFA application, signing a Federal Direct Loan e-Master Promissory Note, and view their loan borrowing history at the National Student Loan Data System.
  • The option of an income-contingent repayment plan or an income-based repayment plan when a student enters repayment. This means a student has the option of ensuring that the loan repayment amount will always be affordable based on what the borrower’s income will allow.
  • Students in the Federal Direct Loan Program, who are employed in public service work and are in repayment on their loans for at least ten years, may have the remaining loan forgiven. While this option does not exist in the FFELP Program, students who borrowed in that program can consolidate their loans into the Federal Direct Loan program in order to take advantage of this forgiveness.

Direct Loan Frequently Asked Questions

What are the primary differences between the William D. Ford Federal Direct Loan and the Federal Family Education Loan (FFELP) program?
The primary difference is the source of the loan funding. Federal Direct Loans come straight from the U.S. Department of Education using funds obtained from the U.S. Treasury. In the FFELP program, funding is provided by private lenders.

Why did the College choose to be a part of the Federal Direct Loan Program?
The Federal Direct Loan program offers a stable source of funding. Volatility in the credit markets, and reductions in lender subsidies, have caused many lenders to pull out of the federal loan programs while many others have stopped offering borrower benefits.

How does this impact me?
If you plan to borrow a federal student loan for the 2010-11 academic year, and your lenders has stopped processing FFELP, you will be borrowing through the Federal Direct Loan Program.

Will I need to do anything?
You will need to complete a Federal Direct Loan Master Promissory Note. You may complete a Federal Direct Loan Master Promissory Note electronically.

How will I know what to do and when to do it?
You will receive notification from our office via Edvance 360 instructing you to file a Federal Direct Loan Master Promissory Note. Help is available in our office; the Director, Arthur Goudeau will assist you through the process.

If I borrowed a Federal Stafford or Federal Grad Plus loan through a private lender last year, and borrow a Federal Direct Loan in the future, will I have to repay two different lenders?
Yes. Your Federal Direct Loan will be serviced by the Department of Education and you will receive correspondence and payment information from the Department. You will also be contacted by other lenders from whom you have borrowed Federal Stafford or Federal Grad Plus loans. However, you have the option of consolidating all your federal loans with the Direct Loan program or any other lender that offers federal loan consolidation loans after you graduate. When it is time to repay your loans, if you consolidate your previous federal loans would be paid in full and all your payments would be made to the Federal Direct Loan Consolidation program.

What happens to the Stafford loans I have already borrowed via my bank or lender? Will the payments still be deferred now that Texas Chiropractic College is changing its loan processing?
As long as you are enrolled in school on at least a half time basis, your prior year Federal Stafford loans will continue to be deferred.

Is there other information available on Direct Lending?