Frequently Asked Questions Regarding The Direct Loan Program
Q. Why is Catholic University entering the Direct Loan Program?
A.
Federal Direct Lending provides the most stable source of loan funding
available because funds are provided by the U.S. Treasury. The instability
of the debt markets and inability of private lenders to deliver
a uniform system of fund delivery has strongly influenced our decision
to find the most secure and reliable solution possible. While there
are many private lenders still in the Federal Family Education Loan
Program (FFELP), Catholic University is concerned about future developments
that could negatively impact our students.
By entering the Direct Loan Program at Catholic University, students
will not have to shop around for a lender or worry that the lender
they chose may not still be in the program in future years. The
Direct Loan Program provides certainty that access to student loans
will not be a problem in the future.
Q. What are the primary differences between Direct Loans and
the Federal Family Education Loan Program (FFELP)?
A. The primary difference is the source of the loan funding.
Direct Loans come straight from the U.S. Department of Education
using funds obtained from the U.S. Treasury. This program offers
students' one single source of contact since these loans are made,
guaranteed and serviced by the U.S. Department of Education. In
the FFEL Program the lender, guarantor and servicer can involve
any combination of banks, financial institutions, and agencies across
the country. Oftentimes, the student's lender will sell their loan
to another lender, loan servicer, or more recently to the Department
of Education. This can add complexity for students, especially if
a problem should occur while the loan is being processed. Under
Direct Loans, there is a single point of contact where students
and their school can turn to resolve any problems that might arise.
Q.
How do I apply for the Federal Direct Stafford Loan?
A. Step 1: Complete the Free Application for Federal Student
Aid (FAFSA) at www.fafsa.ed.gov.
After Catholic University receives your FAFSA and if you are eligible
for a Federal Direct Stafford Loan (subsidized or unsubsidized),
it will be included in your financial aid package.
Step 2: Accept your Federal Direct Stafford Loan(s) in Cardinal
Station at http://cardinalstation.cua.edu
using your username and password that were mailed to you when you
applied. Should you need this information again, you can contact
the Computer Help Desk at 202-319-4357.
Step 3: Complete a Federal Direct Stafford Loan Master Promissory
Note (MPN) on the U.S.
Department of Education's Direct Loan MPN website. Once on this
site, please select the "Complete New MPN for Students Loans" option.
Then, Select "Subsidized/Unsubsidized" option. Follow the steps
to complete the MPN. If you are experiencing technical difficulty
signing the MPN, please contact the Department of Education's customer
service center at 800-557-7394.
Step 4: If you are a first time borrower of a Federal Direct
Student Loan at Catholic University (which all of our students are!),
you must complete an entrance loan counseling session so that you
will know your rights and responsibilities as a borrower. The on-line
session will take you about twenty minutes to complete. Complete
a Federal Direct Loan Counseling session at https://www.dl.ed.gov
For more information on Obtaining a Federal Direct Parent PLUS
Loan or a Federal Direct Graduate PLUS Loan, please review
these instructions. Click
Here (pdf file)
Q. What is the interest rate and fees charged in Direct Loans compared
to FFELP?
A. 2009/2010 Federal Direct Loan Fixed Interest Rate
| Subsidized | Unsubsidized** | |
| Undergraduate | 5.60 percent | 6.80 percent |
| Graduate | 6.80 percent | 6.80 percent |
**The U.S. Department of Education's Direct Loan Servicer will send you a quarterly loan interest statement.
Q. What if I find a lender that offers a better loan than the Direct Loan?
A. The interest rate and fees in Direct Loan are comparable to, or better than, those in the FFELP. The University believes that the simplicity and stability in the Direct Loan Program outweighs the uncertainty and possibility of a slightly lower fee in the FFEL Program.
Q. Why can't I have a choice of which lender to use for my federal student loans?
A. Most students tell us that they are not too concerned with who the lender is, but are just interested in a simplistic process and reliable servicing. Since most banks and financial institutions have eliminated, suspended or reduced any discounts or benefits while a student is in school, the best time for students to exercise a choice is when they enter repayment.
Q. What happens if some of my federal student loans are from a private lender and now part of my loans will be through the U.S. Department of Education Direct Loan Program?
A. It doesn't matter whether your FFELP loans were secured through a private lender in a prior year. It is not uncommon for students to have both FFELP loans from a private lender and remove FFELP here Direct Loans. For example, students who begin their education at a college that uses the Direct Loan Program and then transfers to different college using private lenders for the FFEL Program would have loans with each program. Many of our transfer and graduate students already have this combination. In order to make repayment to one source once the loans come due, many students take out a consolidation loan which combines both types of loans into a single loan. At this time, the Department of Education is the only entity that we know that hasn't suspended or eliminated their consolidation loans.
Q. How does the consolidation process work?
A. Once a student graduates or no longer attends college on a half-time basis, the student can contact the Direct Loan Program for an application for a Direct Consolidation Loan. The consolidation loan will combine the FFELP and Direct Loan loans into a single loan with one, monthly payment. When it comes time to begin repaying the loans, the borrower will be provided with several repayment plan options and will be able to choose the one which best suits their circumstances.
Q. Will other student aid programs such as Federal Work Study or Federal Pell Grant be affected by the switch to Direct Loans?
A. No, those programs are not affected.
Q. How will my Commercial Student Loan be affected?
A. If a student or parent is taking out a commercial student loan for the 2009-2010 school year, we will continue to certify and process these loans from private lenders. Information about the private (alternative) loan program is available on the Office of Financial Aid Website.
As private loan processing depends on operations inside and outside of CUA, please allow 4-6 weeks processing time. Your lender is available to assist with status inquiries.