Good news about student loans? What can be good about student loans? Well, for starters, how about lower interest rates and fees and a smoother process?
Beginning with summer session 2010, Keene State College will switch from the Federal Family Educational Loan Program (FFELP), which we had been using, to the William D. Ford Federal Direct Loan Program for Stafford and PLUS loans, because we believe the Direct Loan (DL) Program offers more advantages for our students and their families.
Because the FAFSA serves as the loan application, the application process is easier, and, because you’re now borrowing from a single lender – the federal government, instead of one or more of the 3,500 lenders who are part of the FFELP program – the process is much less complicated. Parents will be able to take out a Federal PLUS loan at a 7.9% fixed interest rate (FFELP charges 8.5%), with a loan origination cost of 2.5% (FFELP charges 4%). Now, you’ve got to admit, that’s good news.
Direct Loans are great for student borrowers too. Student borrowers can choose from among five repayment plans, including one in which the government forgives the balance of the loan after 25 years, if you’ve been making regular payments during that time. In addition, the government will forgive remaining debt after 10 years if the borrower has made regular loan repayments and been working in a key public service profession such as teaching, government, social work, law enforcement, or a non-profit organization. You can consolidate all federal loans to the Direct Loan Program and still be eligible for some of the loan forgiveness programs.
If you intend to borrow a Stafford loan during the 2010–2011 academic year, you must file your 2010–2011 FAFSA and complete a new Master Promissory Note (MPN). Please note: Stafford loan funds cannot be disbursed to a student account until a new MPN has been completed. The MPN can be completed online. Additionally, parents who would like to borrow a federal Parent PLUS loan during the 2010–2011 academic year must also complete a new loan application/credit authorization and MPN.
Visit the Student Financial Services webpages for more information.