Starting with just over 100 institutions in 1994, we now have about 1,300 schools participating. This tremendous growth is a tribute to the benefits Direct Lending has to offer. The growth is particularly impressive in light of the fact that the future of the program has been debated continuously, thereby dissuading some schools from joining the program. I would like to clear up a few misconceptions about direct lending. Two-year institutions and proprietary institutions represent only four and six percent of the total Direct Loan volume, respectively.
Direct lending is anything but a safe haven for proprietary institutions.
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 During the past three years, only 14 institutions that actually made Direct Loans have withdrawn from the program.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.