Sen. Edward Kennedy (D-MA), chairman of the Health, Education, Labor and Pensions Committee and longtime Direct Loan Program supporter, sent a letter to college presidents Tuesday, urging them join the Direct Loan Program.
Kennedy wrote that the Department has worked to make transitioning to the Direct Loan Program easy. Transitioning to Direct Loans is a good way to protect institutions and students from the turmoil in the credit markets, according to Kennedy.
"The enrollment process has been streamlined and the Secretary of Education has increased the staff at the Department to assist colleges with the transition," Kennedy wrote. "I've also asked the Government Accountability Office to monitor the Direct Loan Program, to make sure the Department has the capacity to take on any increased volume."
After years of declining participation, Kennedy and other Direct Loan Program supporters have seen participation increase over the last year. Over 400 additional institutions are originating loans through the Direct Loan Program this year, increasing the loan volume in the program by almost 50 percent since this time last year. And more may soon be following.
A recent survey by Student Lending Analytics found that more than 1 in 3 FFELP respondents indicated that they are considering a switch to Direct Lending or have already committed to making a change for the 2009-10 academic year.
Kennedy also highlighted actions recently taken by Congress to help students and families pay for college, including expanding student and parent eligibility for federal loans and short term supports to allow private lenders to continue to make federal student loans.
October 28, 2008
Dear College President,
With the current economic crisis undermining families' home values, retirement savings, jobs, and pocketbooks, I wanted to take this opportunity to let you know of important steps Congress has taken to ensure that students will be protected. These actions are needed to assure that students are able to obtain the funds they need to attend college through the 2009-2010 school year. Given the continued volatility in the financial markets, however, I urge you to consider registering for the federal Direct Loan Program, so that your students will be protected in the longer term.
Over the past two years, we've acted to significantly improve students' options for financing their college education. We've provided the largest increase in grant aid since the original GI Bill in order to reduce students' need to rely on college loans. We've also taken steps to strengthen student loan programs by -
- Improving the availability of federal student loans, by giving private lenders a stable source of capital so they can provide students with new loans. We recently extended this legislation, so that students, families, and educational institutions can plan ahead for the 2009-2010 school year.
- Reducing the need for families to obtain high-cost private loans by expanding student and parent eligibility for federal loans.
- Ensuring that federal loans will be available even if private lenders leave the market, by strengthening the existing Direct Loan program, which allows students to borrow directly from the federal government.
If you have not already done so, I urge you to consider signing up for the Direct Loan Program in order to protect your students in the future. The program relies on a steady stream of Treasury capital, protected from volatility in the credit markets, so it will continue to function smoothly regardless of the markets.
Over 400 additional institutions are originating loans through the Direct Loan Program this year, increasing the loan volume in the program by almost 50 percent since this time last year. Colleges that have done so have reported a smooth transition. The enrollment process has been streamlined and the Secretary of Education has increased the staff at the Department to assist colleges with the transition. I've also asked the Government Accountability Office to monitor the Direct Loan Program, to make sure the Department has the capacity to take on any increased volume. Attached is additional information about how to sign up for the Direct Loan Program.
Please contact my office if you have any questions or if your students are having difficulty obtaining loans. Together, we can make sure that students' college dreams aren't the next victims of the financial crisis. Thank you for all you are already doing.
With respect and appreciation,
Sincerely,
Edward M. Kennedy
DIRECT LOAN PROGRAM
Steps for participating in the Direct Loan Program:
- Make sure that the Direct Loan Program is listed on the college's current Eligibility and Certification Approval Report. If not, the college must submit to the Department a revised E-App at www.eligcert.ed.gov.
- Once approved, send an e-mail to the Common Origination and Disbursement School Relations Center, asking to participate actively in the Direct Loan Program. The Department's Direct Loan team will review the request and send a final approval or denial letter via e-mail.
- Inform any third party servicers and/or software vendors of this change.
Two web sites with useful information about the Direct Loan program are:
- www.ed.gov/offices/OSFAP/DirectLoan/participating.html: This Department of Education Web site walks colleges through the process of registering for the Direct Loan Program.
- www.directstudentloancoalition.org: This Web site for the National Direct Student Loan Coalition's provides information and links to additional support to guide colleges through the conversion. The Coalition has established a "mentor" program specifically intended to assist colleges facing challenging system changes, by pairing current Direct Loan institutions with new participants to help them find and adopt the solutions that other colleges are successfully using.
Posted 10/31/08 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web Site questions or comments to Web@NASFAA.org.
