# Presentation: 741971

## Session 44

- Direct Loan A-Z
- Julie Aloisio

## Topics of Discussion

- Brief History of Student Aid
- Basic Overview of the Direct Loan Program
- Direct Loan Processing Basics
- Roles and Responsibilities

## Brief History of Student Aid

## Student Aid History

- 	The GI Bill

- College Work-Study
- Program

- National Defense
- Education Act

- 1944

- 1958

- 1965

- Higher
- Education Act

- 1964

## Student Aid History

- Basic Educational
- Opportunity Grant (PELL)

- 	**Direct Loan Program**

- 1969

- 1980

- HERA

- 1994

- 2006

- PLUS and Consolidation created

- 1986

- Renamed FFEL, unsub begins

- 1992

- 	Creation of SLS

## Basic Overview of the Direct Loan Program

## Direct Loan Overview

- Official Name:
- William D. Ford Federal Direct Loan Program
- What is it?
- Federal Student Aid program providing low-interest loans to students and parents

## Direct Loan Types

- Subsidized
- Need-based; no interest charged while in school and during grace periods or deferment
- Unsubsidized
- Not need-based; interest charged during all periods
- PLUS
- Not need-based; for parents or graduate/professional students
- Consolidation
- Combines loans for easy repayment

## Subsidized and Unsubsidized Loans

- Enrollment
- Eligibility
- Agreement- Master Promissory Note
- Interest
- Loan Limits

## Annual Loan Limits (Sub/Unsub Only)

## Subsidized and Unsubsidized Loans

- True or False?
- There is no charge for  Direct Loans
- The student can cancel his/her loan
- Students begin repayment immediately after graduation

## Subsidized and Unsubsidized Loans

- True or False?
- There is only one type of repayment plan.
- Students can postpone payments.
- Loans can be discharged (forgiven)

## PLUS Loans

- Eligibility
- Credit Check
- Agreement-MPN
- Single loan MPNs
- Interest
- Loan limit

## PLUS Loans

- Borrower Type
- Parents
- Graduate/Professional students
- What is the difference between borrower types?

## PLUS Loans

- True or False?
- There is a charge for the loan
- Parents receive the money directly
- There is only one repayment plan
- Repayment is delayed until after school
- There are set loan limits for Graduate/Professional students

## Master Promissory Note (MPN)

- Legal agreement
- Multi-year, multi-loan notes
- Exceptions
- Plain Language Disclosures
- Disclosure Statements

## Direct Loan Program Processing Basics

## Bird’s Eye View of the Direct Loan Process

***Origination***

***Drawdown***

***Repayment***

**Student/Borrower**

***Disburse***

***Apply***

**Federal Student Aid**

***Servicing***

## Common Origination and Disbursement (COD) Processing

- School confirms eligibility, awards, and disburses aid
- School creates student record
- Common Record or COD Web site
- School sends information to COD
- COD processes/edits and returns response
- Error correction, when necessary

## Terms and Definitions

- CPS Match and Student Identifiers
- Common Record
- XML
- Origination
- Disbursement
- Drawdowns
- “Booked” Loans

- Message Classes
- Reconciliation/Closeout
- SAIG
- EDExpress

## School Setup OptionsTrue or False, what do you think?

- Funding
- Schools have no options for funding
- MPN Printing and Processing
- MPN processing is hard
- Multi-year vs. Single-year
- Only 4-year schools can use the multi-year function of the MPN

## MPNs-Paper or Electronic

- Paper Processing
- COD or school can print
- Forms available to order
- School handles the paper

- Electronic Processing
- School signs up via Customer Service
- Setup options
- Faster processing and reduces errors

## School Tools

- COD Web site
- COD Technical Reference
- Reports
- Publications
- Communications

## Roles and Responsibilities

## Students and Schools

- Students
- Apply for aid and meet eligibility requirements
- Receive and repay
- Schools
- Certify eligibility
- Deliver proceeds
- Educate borrowers about their responsibilities
- Send/receive financial and student data to/from Federal Student Aid
- Funds management and reconciliation

## Federal Student Aid

- Policy Liaison and Implementation
- Financial Partners
- Borrower Services
- Chief Financial Officer
- Ombudsman
- Business Operations
- Application, Operation, and Delivery Services
- Direct Loan Operations

## Direct Loan Operations

- Provides operational, system, and service support to *schools*
- Eligibility
- Funding
- Reconciliation/Closeout
- Communication/Customer Service

## Direct Loan Information

- Regulatory Cites: Code of Federal Regulations 34
- Part 668 provides the general provisions for all the Title IV programs
- Part 685 is specific to the Direct Loan Program
- FSA Handbook References
- Origination: Volume 4, Chapter 1
- MPNs: Volume 4, Chapter 1
- Disbursements: Volume 4, Chapter 2
- Cash Management: Volume 4, Chapter 3

## Resources for Schools

**COD School Relations Center**
- www.cod.ed.gov 	800/848-0978
**General Direct Loan Information**
- www.ed.gov/offices/OSFAP/DirectLoan/index.html
**General Federal Student Aid Information**
- www.ifap.ed.gov
**Common Services for Borrowers-School Services**
- http://schools.dlssonline.com/	888/877-7658
** ****Direct Loan Consolidation Center**
- www.loanconsolidation.ed.gov		800/557-7392

## Resources for Borrowers

**Direct Loan Information**
- www.ed.gov/offices/OSFAP/DirectLoan/index.html
**General Federal Student Aid Information**
- www.studentaid.ed.gov	800-433-7327
**COD School Relations-Applicant Services**
- 800/557-7394
**Direct Loan Servicing Center/Common Services for Borrowers**
- www.dl.ed.gov	800/848-0979
** ****Direct Loan Consolidation Center**
- www.loanconsolidation.ed.gov	800/557-7392
**Federal Student Aid Ombudsman**
- www.ombudsman.ed.gov	877/557-2575

## Other Direct Loan Sessions

- Session 40	Hands On Tour of  DL Tools
- Session 41	Best Practices in Using DL LSDA
- Session 42	DL Funding & Cash Management A-Z
- Session 43	Best Practices for Processing DL at Your School
- Session 45	Direct Loans – How to Get Started
- Session 46	What’s New in Direct Loans: Grad PLUS and 			other HERA Related Changes
- Session 47	Direct Loan Reconciliation and Closeout
- Session 48	Direct Loan Reports & Reference Materials-Tools 		of the Trade
- Session 49	How Direct Loan Servicing is Improving the 			Financial Aid Experience for You and Your 			Students

## Questions or Comments?

- We appreciate your feedback and comments.
- Direct Loan Operations Team can be reached via e-mail at:
- 			dlops@ed.gov