direct loan faq's
**IMPORTANT INFORMATION ABOUT STUDENT LOANS**
Beginning with the Summer 2010 term, the University of North Alabama will begin participation in the FEDERAL DIRECT LOAN PROGRAM. Due to the uncertain outcome of federal legislation regarding the Federal Family Educational Loan Program (FFELP), UNA has made the decision to participate in the Federal Direct Lending Program to ensure that our students have continued access to federal student loan funds. For more information about this switch, click here.
How does this change affect me? New and returning student borrowers will be required to eSign a Direct Loan Master Promissory Note (MPN). The only exception will be students graduating at the end of Summer 2010 who are current FFELP borrowers.
New borrowers will be required to complete Direct Loan Entrance Counseling. Previous borrowers who have already completed Entrance Counseling will not be required to repeat counseling to receive Direct Loans.
Direct lending offers numerous borrower benefits, including:
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Effective July 1, 2010, the government pays 0.5 percent of your origination fee at disbursement, commonly called the loan rebate benefit. You are eligible to keep this benefit as long as you make the first 12 monthly payments of your student loan on time. The net disbursement of your loan will be 0.5% of the principal.
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There is a .25% interest rate deduction for automatically debiting your payment from your checking account.
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Repayment options include Standard, Extended, Graduated, and Income Contingent.
How does this affect my parent's PLUS Loan? Parents who wish to borrow through the PLUS program should complete the PLUS loan request form for the appropriate aid year.
What will happen to the existing loans that I have borrowed from other lenders? After graduation, you have a choice. You may either make individual payments to your previous lender(s) and to the US Department of Education for your Direct Loans, or you can consolidate your loans into one payment. You may seek to consolidate all of your loans with your previous lender or with the Department of Education. However, many private lenders have discontinued consolidation services.
If I have previously borrowed under the FFEL Program, do I have to complete another Master Promissory Note (MPN)? Yes, you must sign a Direct Loan MPN. This will be the last promissory note that you should have to sign as long as you continue to attend UNA. Your Federal PIN is required to eSign.
How and when do I complete a Direct Loan MPN? You should complete your Direct Loan MPN online as soon as possible if you plan to borrow a subsidized or unsubsidized Stafford loan for summer 2010 or for the 2010-2011 academic year.
I have previously completed Entrance Counseling under the FFEL Program. Do I have to complete counseling again for a Direct Loan? No, you will not be required to complete Entrance Counseling if you have already completed it under FFELP. New borrowers must complete Direct Loan Entrance Counseling.
Where can I consolidate my student loans? You may explore your options with previous lenders, as mentioned above, or use the Federal Direct Loan Consolidation Program.
Will this change cause my prior loans to go into repayment? No. Your previous Stafford loans will not go into repayment as long as you remain enrolled at least half-time.
How do I contact the Direct Loan Program?
Borrowers can contact Direct Loan Servicing at 888-877-7658 or visit the Direct Loan Servicing Website.
