Online Loan Process

• Direct Lending FAQs
• Process steps

Direct Lending Frequently Asked Questions

(click here for printable version - pdf file)

Beginning in fall 2010, Southern Wesleyan University will begin to participate in the William D. Ford Direct Loan program.  Student and parent borrowers will receive funding for their federal student loans directly from the U.S. Department of Education rather from private banks and other lending institutions as previous through the Federal Family Education Loan Program (FFELP).  Below is a list of questions related to the Direct Loan Program that should help students and families understand how this program works.

• Q.  What are Direct Loans?
  A.  Direct Loans are federally insured low-interest education loans for students and parents.  These include the Direct Subsidized Loan, the Direct Unsubsidized Loan, the Direct Parent Loan for Undergraduate Students (PLUS) and the Direct Graduate PLUS Loan programs for graduate and professional students.
• Q.  Why is SWU changing to the Direct Loan Program?
  A.  The Direct Loan Program will provide SWU students with a reliable source of educational loan funding.  While volatility in the credit markets and reductions in lender subsidies have caused some lenders to stop making federal student loans or to stop offering borrower benefits and other services, the Direct Loan Program is not impacted by such changes in the economy and can therefore provide a stable and predictable loan process.
• Q.  Does this change impact me?
  A.  If you are a new or continuing student or parent borrower who plans to borrow a federal loan for the 2010-2011 academic year, this change will affect you.  After the 2009-2010 academic year, SWU can no longer process any loans through the Federal Family Education Loan Program.
• Q.  Does this change affect my current year federal loans?  Also, what happens if I want to attend summer school?
  A.  All current year and 2010 summer session loans will be processed through the current Federal Family Education Loan – Stafford Loan process.  Your first Direct Loan will be for the fall 2010 semester.
• Q.  Will other student aid programs such as federal and state grants be affected by what is happening with student loans?
  A.  No, those programs are not affected.
• Q.  What is the difference between Direct Loans and the Federal Family Education Loan Program (FFELP)?
  A.  The primary difference between Direct Loans and the Federal Family Education Loan Program, (Stafford Loan) is the source of funding.  While FFELP loans are funded through a variety of banks and private lending institutions, Direct Loan funds are borrowed directly from the federal government.  Additionally, with Direct Loans borrowers have a single contact, the Direct Loan Servicing Center, for everything related to the repayment of the loan.
• Q.  Are there any differences in interest rates and fees between the two programs?
  A.  The interest rate for Federal PLUS Loans is 7.9% in the Direct Loan program (compared to 8.5% in the FFEL program).  Interest rates for Federal Unsubsidized and Subsidized Loans are the same in both programs.  See the following chart for a comparison of fees between the two programs:  

*The upfront rebate reduces the fee you pay at origination.  If you don’t make your first 12 monthly payments on-time, the rebate amount will be added to your principal balance.

• Q.  What do I need to do to receive a federal loan for 2010-2011?
  A.  Students will continue to complete the Free Application for Federal Student Aid (FAFSA) on the web, as they’ve done in the past.  Just indicate “student loans” when asked “in addition to grants, are you interested in being considered for work-study or student loans” on the FAFSA.  Parents who wish to use the PLUS loan (or the Graduate PLUS loan if you are a graduate or professional student) will need to complete a separate PLUS loan application.  We will have more information about this process in the weeks to come.
• Q.  Do I have to complete another Master Promissory Note?
  A.  Yes, you must sign a new Direct Loan Master Promissory Note (MPN) because you will be borrowing from a new lender, the federal Department of Education.
• Q.  Can I complete my new Master Promissory Note now?
  A.  Yes!  You may choose to complete your new Direct Loan MPN at any time, even before you’ve received your award letter!  This process can be completed online.  You will need your federal PIN in order to electronically sign your MPN.  This is the same PIN you use to sign the FAFSA.  More information on your PIN is available online.
• Q.  I have previously completed entrance counseling under the FFELP program.  Do I have to complete entrance counseling for Direct Loan?
  A.  No, if you have previously completed entrance loan counseling for the Federal Stafford Loan Program, you will not be required to complete it for the Direct Loan Program.  Only new borrowers are required to complete entrance counseling. If you are a first time borrower, you need to fill out Direct Loan Entrance Counseling.
• Q.  I am a parent.  I plan to borrow a PLUS Loan for my student in 2010-2011.  I usually get pre-approved through my lender.  What should I do this year?
  A.  You will borrow through the Direct Loan program as well.  We will have more information about this process in the weeks to come.
• Q.  I am a graduate or professional student and plan to borrow a Graduate PLUS Loan in 2010-2011.  I usually get pre-approved through my lender.  What should I do this year?
  A.  You will borrow your Graduate PLUS Loan through the Direct Loan program as well.  We will have more information about this process in the weeks to come.
• Q.  Will I still be able to continue borrowing through the same lender as last year?
  A.  No.  If you wish to receive a federal student loan for the 2010-2011 academic year, you will be required to borrow through the Direct Loan program.
• Q.  What will happen to the existing loans that I have borrowed with other lenders?  Will I have to repay two different lenders now?
  A.  Any loan(s) you borrowed from another lender either here at SWU or at another institution will be maintained by the lender/servicer with whom you signed your original MPN.  Your Direct Loan will be serviced by the Department of Education.  You will receive correspondence and payment information from both the Department of Education and your prior lender/servicer. 
   
  Once you graduate or choose not to attend school at least half time, you will have the option to combine your existing federal education loans into one new loan with the Federal Consolidation Loan Program.  With a consolidation loan, you will have only one payment to make each month and one lender.  To learn more about consolidation, access this Web site. You may review all of your loans at the student access Web site for the National Student Loan Data System.  

Process

Step One:

Direct Loan Entrance Counseling

All Students are required to complete the counseling session. Simply click on the link above and follow the instructions. The Financial Aid office will be notified electronically that you have fulfilled this important requirement. Failure to complete this session will delay your loan funds.

Step Two:

Direct Loan Master Promissory Note

Students simply click on the link above to sign your Direct Loan MPN.  The MPN must be signed in order to receive your loan funds.   Once you access the site, information for the MPN is on the left side of the page.  You will need your FAFSA PIN number to complete your MPN.  If you do not remember your PIN, you may access the PIN site for retrieval. Parent Loan Borrowers may also click on the above link and follow the steps required for a credit check and apply for a Parent (PLUS) loan.  If approved, you will complete the necessary application (you will need a FAFSA PIN number) for funding.  SWU will be notified of your request and will be able to award the PLUS loan.  PLUS Loan borrowers are required to complete the FAFSA before SWU can process the loan request.

Private educational loan information

Choose your Lender

SWU has compiled a list of private lenders that previous borrowers have used the past academic year. These lenders have indicated they will continue to offer such educational loans to prospective borrowers. By clicking on the link above you will be directed to complete your Promissory Note for a Private Educational  Loan. You must sign your Promissory Note electronically using one of the electronic signature options available.

After completing your Promissory Note, the Financial Aid Office at Southern Wesleyan University will be notified by the lender in order to certify and award your private loan.

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