Furthermore, reports that schools are increasingly dropping out of the program and returning to the FFEL program are simply false. During the past three years, only 14 institutions that actually made Direct Loans have withdrawn from the program. In that same time, about 1,300 schools have joined direct lending. Schools and students have embraced the direct lending program for numerous reasons. First, the program eases administrative burden by eliminating paperwork from a variety of banks and guaranty agencies.
Direct lending employs one application, one source of funds, and one loan origination center.
All loan information, except for the promissory note, is transmitted and acknowledged electronically. Second, schools can disburse loan proceeds and adjust loan amounts much more quickly and efficiently because they no longer need to obtain lender and guaranty agency approvals. Similarly, borrowers only have to interact with a single servicing center for all questions concerning their loan status and repayment. Third, direct lending provides schools more flexibility in administering the loan program. Direct Loans can be tailored to meet an institution's automation needs, whether the institution operates in a PC or mainframe environment.