University joins Direct Student Loan Program for students obtaining financial assistance

The University of Chicago has joined the Federal Direct Student Loan Program for graduate, undergraduate and professional school student borrowing. The switch to the Federal Direct Student Loan Program will begin this summer, when students begin to borrow loans for the 2010-2011 academic year.

Through 2009-2010, University students borrowed federal loans through private lenders in the Federal Family Education Loan Program. Under the Direct Loan Program, students will work with their Financial Aid Offices to obtain loans from the Federal Government instead of from private banks and credit unions.

The University joins more than 2,000 U.S. higher education institutions in the Direct Loan Program.  "The Direct Lending program will provide students with a predictable and responsive source of loans in these turbulent times," said Kimberly Goff-Crews, Vice President for Campus and Student Life and Dean of Students in the University. "We believe that this change will result in better service to our students, while they are in school and during their loan repayment."

The change comes on the heels of market turmoil, which led many banks to terminate their participation in the FFEL Program. Over the past two years, many students were forced to select new lenders at the last minute.

Students borrowing Federal Direct Stafford Loans will have the same terms and conditions and interest rates as loans borrowed under the FFEL Program. However, Grad PLUS and Parent PLUS Loan borrowers will benefit from a lower interest rate of 7.9 percent, compared to the 8.5 percent offered for FFEL Loans. The Federal Direct Student Loan Program also offers loan fee rebates, more repayment plan choices and additional loan forgiveness options.

Current students who have loans will need to sign a new Master Promissory Note to move to the Federal Direct Student Loan Program. More information about Direct Loans and signing a new MPN will be sent from students' financial aid offices.

For more information on the Federal Direct Student Loan Program, go to http://www2.ed.gov/offices/OSFAP/DirectLoan/student.html. Students with specific questions should contact their respective Financial Aid Office: