CSUN MOVES TO DIRECT LOANS
Beginning in Fall 2009, California State University, Northridge will participate in the William D. Ford Federal Direct Loan Program. Students and parents will now get Stafford and PLUS (parent) Loans directly through the U.S. Department of Education, rather than through lenders participating in the Federal Family Education Loan Program (FFELP), such as Bank of America, Citibank and Wells Fargo.
The following FAQs provide answers to some commonly asked questions about CSUN's move to the Direct Loan Program:
WHY IS CSUN MOVING TO THE DIRECT LOAN PROGRAM?
- The shifting credit markets and changes in federal law have reduced the number of lenders offering Federal Stafford and PLUS Loans through FFELP. In addition, because of changes in federal law, private lenders can no longer afford to offer the discounts and incentives that previously made it preferable to borrow from them rather than the Department of Education.
CSUN very carefully weighed the differences between FFELP and the Direct Loan Program. We decided to go with the Direct Loan Program because it:
- Better guarantees the availability of funds for families.
- Is an easier process for families as every borrower uses the same application process and is subject to the same loan fees.
- Is more affordable for families in the short term and offers the same cost to families in the long term (see table below).
- Offers loans through the same department that handles consolidation of student loans (the U.S. Department of Education).
- Will give students, parents and the University just one contact point in case of problems or questions with loans.
| Direct Loan Program Loan Fees | FFELP Loan Fees | |
|---|---|---|
| Stafford Loan | 0.5% | 1.5% |
| PLUS Loan | 2.5% | 4% |
WHAT IS THE DIFFERENCE BETWEEN FFELP AND THE WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM?
- In the Direct Loan Program, the U.S. Department of Education acts as a lender, providing funds for Stafford Loans and PLUS Loans. With FFELP, students chose a bank or lender; the college then certified that students and parents were eligible for the loans and applied the loan proceeds to student accounts.
IF I HAD PREVIOUSLY RECEIVED A STAFFORD OR PLUS LOAN THROUGH A LENDER, DO I HAVE TO CHANGE TO THE DIRECT LOAN PROGRAM?
- YES, ALL STUDENTS, who apply for a Stafford or PLUS Loan beginning with the 2009-2010 academic year, will be borrowing through the Federal Direct Loan Program. As always, students may apply for private (non-federal) loans through the lender of their choosing.
WHAT HAPPENS TO THE LOANS I BORROWED FROM A LENDER IN THE FFELP PROGRAM?
- You have the choice of repaying your FFELP Loans according to the terms of repayment agreed to in your promissory note, or you can consolidate your FFELP Loans with your Direct Loans after you leave school. For more information on Direct Loan Consolidation, you may go to https://loanconsolidation.ed.gov/appentry/appindex.html
WHAT STEPS DO I NEED TO TAKE TO APPLY FOR A STAFFORD OR PLUS LOAN?
- Apply for 2009-2010 Financial Aid if you have not already done so.
- After receiving your 2009-2010 Financial Aid Award Notice, accept your Federal Stafford Loan by logging into the myNorthridge Portal and accessing the SOLAR Student Center OR by using a paper Loan Request Form. PLUS Loans must be requested using a paper PLUS Loan Request Form.
- Complete a Direct Loan Master Promissory Note (MPN) on the Direct Loan website at: https://dlenote.ed.gov/empn/index.jsp
- Complete Direct Loan Entrance Counseling by following the links located at: https://www.dl.ed.gov/borrower/EntrCounselingPage.do?cmd=initializeContext
- You must accept your loan by the following deadlines:
Fall Loan - 12/11/2009
Spring Loan - 5/7/2010
All Loans for the 2009-2010 academic year must be accepted by 5/7/2010.
ARE OTHER COLLEGES AND UNIVERSITIES MAKING THE MOVE TO THE DIRECT LOAN PROGRAM?
- Yes, other CSU’s have made the move recently and others will make the move shortly.
WHO SHOULD I CONTACT IF I HAVE QUESTIONS ABOUT CSUN’S MOVE TO THE DIRECT LOAN PROGRAM?
- Please contact the Financial Aid & Scholarship Department at (818) 677-4085, TDD# (818) 677-4958 or by email at financial.aid@csun.edu for more information.