Education Department Urges Institutions to Prepare to Make Direct Loans

The Department urged institutions to be prepared to deliver student loans for the 2010-2011 award year by signing up for the Direct Loan Program in the Department's first issue of Direct Loan Source, a monthly, electronic newsletter that highlights Direct Loan Program updates and Direct Loan resources provided by the Department.

"The Department of Education has gone to great lengths to update our systems and increase capacity in preparation for whatever outcome is reached by Congress. Today, we are ready to support each and every institution that chooses to participate in the Direct Loan Program," writes William Taggart, the Department's chief operating officer. "I ask you to ensure that your school is equally prepared. Even if the Direct Loan Program is not your first choice, please plan for any possible outcome.

Taggart notes that schools should initiate preparations to participate in the Direct Loan Program regardless of the outcome of the current debate in Congress or personal views about the loan programs.

"It is imperative that your school is prepared to accurately and efficiently deliver federal student loans for the 2010-2011 academic year," Taggart writes. "I encourage you to begin your preparations now to allow your students to remain focused on what's truly important -- their education."

The newsletter includes a list of preparation tips for institutions to help them prepare to deliver loans through Direct Loan Program. The Department recommends that you:

Check your Eligibility and Certification Approval Report (ECAR) to be sure that you are approved to participate in the Direct Loan Program. Most schools are now set up to participate in the Direct Loan Program.
Review your banking information with G5. In the Direct Loan Program, you can use the same bank account for Direct Loans that you currently use for your other Title IV Programs or you can set up a separate bank account. Your school should be thinking about and discussing this option.
Decide if each campus and/or location will be treated as a separate entity for funding, origination and disbursement or if your locations will submit data to a ‘home' or central campus for processing.
Attend Direct Loan Program training if you need more information. For a comprehensive list of upcoming training opportunities, access our Direct Loan Training Announcement.
Continue to monitor www.direct.ed.gov for updates on the Direct Loan Program.

The Department also recommends you:

Initiate conversations with IT, business office, and financial aid staff to identify changes, scope, and impact of transitioning to the Direct Loan Program.
Check with your commercial software vendor and understand what adjustments will need to be made to process Direct Loans with that product.
Identify Web sites and publications that contain existing FFEL information for students and parents. These will need to be updated if your school chooses to, or is required to, switch to the Direct Loan Program.
Think about the timing and messaging of a potential communication to parents and students if your school chooses to, or is required to, switch to the Direct Loan Program.

The newsletter also highlights upcoming Direct Loan training opportunities offered by the Department. Federal Student Aid is offering instructor-led, online training sessions on Direct Loans. The webinar suite consists of six different 90-minute sessions related to key aspects of Direct Loan processing. More information about these training opportunities is available online.

Posted 10/05/09 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web site questions or comments to Web@NASFAA.org.