Federal Direct Lending
Learn how the new federal program impacts Nevada students
Why is the university switching from the Federal Stafford Loan program to the Federal Direct Loan Program?
On March 26, Congress and President Obama officially ended the Federal Family Education Loan Program that provided authorization for lenders to make the Federal Stafford and PLUS Loans. Beginning July 1, 2010, the lender based Federal Stafford and PLUS loan programs will be replaced by the Federal Direct Loan program at every participating college and university.
What happens if I borrowed a Stafford Loan previously, but now must borrow a Direct Loan?
Everyone borrowing the Federal Direct Loan for the first time will have to sign a new promissory note on the U.S. Department of Education's website. If you have never borrowed a Stafford loan you will need to complete Entrance Counseling online as well. Previous borrowers at UNR who have already received Stafford loans do not have to complete entrance counseling again. Once completed, we will certify your loan for disbursement.
Are the terms and condition of the Direct Loans the same as the Federal Stafford and PLUS Loans?
The grace period, deferments, repayment periods, and alternate repayment plans are identical with FFELP loans.
If I have both the Federal Stafford and Direct Loans, will I have to make two payments when I enter repayment?
You have the option (and are generally encouraged) to consolidate your Federal Stafford and Direct Loans into a Federal Direct Consolidation loan. The option to consolidate your Federal Stafford Loan and Federal Direct loan into a consolidation loan while you are still in school was reinstated when the budget reconciliation bill was signed. If you choose to consolidate while in school or before repayment you will lose your 6 month grace period and repayment would begin immediately when you graduate or drop below half-time. If you choose not to consolidate your loans, you would have two payments, just as you would if you borrowed a Stafford Loan from two different lenders. Since most lenders have been selling their Stafford loans to the U.S. Department of Education, it is likely that your loan will be serviced by the same company servicing Direct Loans, potentially resulting in a single payment anyway. You will, however, have to pay a minimum monthly payment on each loan if you do not combine them into a single consolidation loan.
Do I have the option to stay with my current lender and borrow a Federal Stafford Loan?
No. Now that the program has been discontinued by the federal government, your lender cannot offer you a Federal Stafford loan for the Fall 2010 or Spring 2011 academic year. Commercial lenders will be limited to offering only private, credit-based, market-driven loan. You may be eligible to borrow from your previous lender for this summer school session though.
Who would I talk to if I have questions or problems with my Direct Loan?
Your first contact would remain with the University of Nevada, Reno Financial Aid Scholarships Office. We should be able to resolve most "in-house" issues. Once you go into repayment, most of your communication will be with the loan servicing company assigned to your loan by the U.S. Department of Education. You can track your loans on the National Student Loan Data System at www.nslds.ed.gov. For help in resolving loan issues with lenders, servicers or guarantors contact the Federal Student Loan Ombudsman.