Beginning in fall 2009, Bethel University will participate in the William D. Ford Federal Direct Loan Program. This means that students and parents will now get Stafford and PLUS (parent) Loans directly through the U.S. Department of Education, rather than through private lenders participating in the Federal Family Education Loan Program (FFELP).

"We have carefully weighed the strengths and weaknesses of the Direct Loan Program with the Federal Family Education Loan Program," says Bethel University Director of Financial Aid Jeff Olson. "It is our conclusion that the Direct Loan Program is simpler, faster, and less expensive for borrowers. In addition, it ensures the availability of funds for our students and their families."

The shifting credit markets and changes in federal law have reduced the number of private 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.

The following FAQ provides answers to some commonly asked questions about Bethel's change to the Direct Loan Program.

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.

Why is Bethel changing to the Direct Loan Program?

Bethel very carefully weighed the differences between FFELP and the Direct Loan Program. We decided to go with the Direct Loan Program because it:

• Is a simpler process for families as every borrower uses the same application process and is subject to the same loan fees;

• Better guarantees the availability of funds for families;

• Is cheaper for families in the short term and offers the same cost to families in the long term*; and

• Offers loans through the same department that handles consolidation of student loans (the U.S. Department of Education).

*The net fee for the PLUS loans is 2.5 percent through the Direct Loan Program vs. 4 percent through FFELP. The net fee for the Stafford Loan is 0.5 percent through the Direct Loan Program vs. 1.5 percent through FFELP. The PLUS loan interest rate is 7.9 percent through the Direct Loan Program, as compared with 8.5 percent through FFELP.

If I'd previously received a Stafford or PLUS Loan through a private lender, do I have to change to the Direct Loan Program?
Yes, all students needing a PLUS or Stafford Loan for the 2009-10 school year will need to apply for the loan through the Direct Loan Program. As always, you may apply for private (not federal) loans through the lender of your choosing.

What steps do I need to take to apply for a Stafford or PLUS Loan?
1. Apply for financial aid if you have not done so already.

2. After receiving your notice of financial aid eligibility (award letter), request/accept your Federal Stafford Loan via Banner Self-Service in BLink (Bethel's internal web portal) or by using a paper Loan Request Form. PLUS Loans must be requested using a paper Loan Request Form.

3. Complete a Direct Loan Master Promissory Note (MPN) on the Direct Loan website: www.dlenote.ed.gov.

4. Complete Direct Loan Entrance Counseling (for first-time Stafford Loans borrowers only) by following the links located at www.bethel.edu/finaid/counsel.

Are other colleges and universities making the change to the Direct Loan Program?

Yes, other Minnesota schools have made this same change in the last year, including College of St. Benedict, Macalester College, Northwestern College, Southwest Minnesota State University, St. John's University, and the University of St. Thomas.

Who should I contact if I have questions about Bethel's change to the Direct Loan Program?

Please contact the Office of University Financial Aid at 651.638.6241; 800.255.8706, ext. 6241; or finaid@bethel.edu.

Posted 02/11/09 to www.NASFAA.org. Posting of press releases is done as a service to Members and does not imply endorsement or support by NASFAA. NASFAA does not review this information for content or accuracy.