THE STUDENT LOAN REVOLUTION!
As of March 30th, 2010
ALL NESCOM STUDENTS MUST USE THE DEPARTMENT OF EDUCATION FOR THEIR FEDERAL STAFFORD AND PARENT PLUS LOANS.
WHAT HAPPENED?
The student lending industry has been reformed as part of the Health Care and Education Reconciliation Act of 2010, signed into law March 30, 2010. The reform defines the Department of Education’s William D. Ford Direct Lending Program as the primary lender of federal education loans (Stafford and Parent PLUS Loans). Federal education loans are loans that students are eligible for based on the information filed on their Free Application for Federal Student aid (FAFSA).
HOW DID IT WORK BEFORE?
Before this Act was passed, you could get a federal student loan in two places. You could either choose a lender from the Federal Family Education Loan Program (FFELP) or you could choose the one lender under the Department of Education called the William D. Ford Direct Loan Program.
In the FFEL Program, private lenders, like Bank of America, Sallie Mae, Nelnet, etc., were given government money (or subsidies) to make federal loans for students in the form of a Stafford or similar loan. The FFEL program was a public/private partnership where the government allowed the participating private banks to lend money to students and collect the interest that accrued on those loans. If a student did not pay their loan back to the private lender, the government would pay back the loan to the private lender, minimizing the risk the bank took on students.
The Direct Loan Program works in the same way except the loan is made directly from the Department of Education to the student. If the student doesn’t pay back the loan, the government takes the loss on the loan itself.
WHAT DOES THIS MEAN FOR ME?
Now every student that would like to accept a loan listed on their Award Letter MUST use the Direct Lending program as a lender.
*EVEN IF YOU HAD YOUR STAFFORD LOAN WITH BANK OF AMERICA, SALLIE MAE, NELNET, ETC., YOU WILL NEED TO COMPLETE A NEW APPLICATION/MASTER PROMISSORY NOTE WITH THE DIRECT LENDING PROGRAM.
HOW DO I APPLY FOR MY LOAN?
Click on the links above to get Step-By-Step instructions on how to apply for your loan. In general, to apply for a new loan all students should visit http://www.studentloans.gov/. This is the new site created just for federal student loans. All students who have filed a Free Application for Federal Student Aid (FAFSA) should already have an account.
To access the site simply click the green "Sign In" button in the "Manage My Direct Loan" box. You will be asked for your Name, Social Security Number, Date of Birth, and the PIN used to sign your FAFSA. Once you are logged in, you will have access to the application process, Master Promissory Note (MPN), Online Entrance Counseling, Repayment Resources, and other tools that make this site a one-stop-shop for all federal loans at NESCom.
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