[419] MTSU Financial Aid Shifts This Fall to Federal Direct Loan Program

Release date: April 15, 2009


News & Public Affairs contact: Randy Weiler, 615-898-2919 or jweiler@mtsu.edu
Financial aid contacts: David Hutton, 615-898-2422 or dhutton@mtsu.edu
David Chambers, 615-898-2246 or dchambers@mtsu.edu

MTSU Financial Aid Shifts This Fall to Federal Direct Loan Program


(MURFREESBORO) — Effective for the fall 2009 semester, MTSU will participate in the Federal Direct Loan Program for Stafford and PLUS loans, Financial Aid Director David Hutton said.
MTSU will no longer process Stafford and PLUS loans through lenders in the Federal Family Education Loan Program, he said.
“Our main reason for the change is to help guarantee the availability of loan funds and to help simplify the loan process for our students,” Hutton said. “This year, several lenders have stopped processing loans, they have been late in delivering funds, or they changed guarantors without notifying their borrowers, which required students to sign additional promissory notes.
“With MTSU having over 12,000 students borrowing in excess of 90 million dollars each year, we do not want these problems to occur again next fall, so we examined the process and decided that now is the time to switch to Direct Lending,” Hutton continued. “Under this program, students will borrow funds directly from the federal government. The loans will be guaranteed faster, and MTSU can disburse funds quicker.”
Early indications are that students are adapting to the change quickly.
“Three days after notifying students of the change, we had more than 500 (students) electronically signing Direct Lending master promissory notes,” Hutton said.
MTSU is joining the universities of Louisville, Auburn and Alabama, Motlow and Nashville State Community Colleges and others in shifting to the Federal Direct program, said David Chambers, financial aid assistant director, who added that the program “is becoming more and more prevalent.”
Until this year, Federal Family Education Loan Program lenders offered attractive benefits to MTSU borrowers, Hutton said.
Recent volatility in the national credit markets and reductions in federal subsidies available to lenders participating in the Federal Family program, however, have led many lenders to stop offering borrower discounts or to discontinue participation in the program altogether.

Hutton said it became evident during MTSU’s research that the Federal Direct Loan Program was better for students and parents here. He added that the National Direct Student Loan Coalition document, “Benefits of Direct Lending,” provides an excellent comparison of loan programs.
For fall ’09 and spring 2010, all returning and new borrowers will need to sign a Federal Direct/Stafford master promissory note at http://dlenote.ed.gov/empn/index.jsp. All new students must complete an entrance interview at www.dl.ed.gov/borrower/EntrCounselingStart.do.
The master promissory note and entrance interviews generally must be completed once. Direct Lending makes the process easier for students because the federal Web sites are easier to navigate and the results can be electronically loaded to the student’s account.
The MTSU Financial Aid Web site, www.mtsu.edu/financialaid, has additional information, including a section on frequently asked questions about the Federal Direct lending program.

For MTSU news and information, go to mtsunews.com.