Tennessee Technological University recently became the fifth public educational institution in Tennessee to offer federal direct student loans. The direct lending program, now in it's third year, allows university financial aid offices to process federal student loans through the U.S. Department of Education without going through a guaranty agency or lending institution.
Eligible students receive a promissory note detailing the terms of the loan.
Thanks to new computer software, applications, promissory note information and payment data can all be processed electronically by the institution and the federal government. Through direct lending, the amount of a student's loan will be credited automatically to his or her account to pay for tuition, fees, room and board and other charges, with any remaining funds going to the student. Ray Holbrook, director of Financial Aid at Tennessee Tech, says that because much of the data will be transferred electronically, the loan process will take considerably less paperwork as well as less time. Approval time may be reduced from weeks or even months to days. Corrections or revisions can be made by the financial aid office using a computer.