Direct Lending

Oregon Tech is participating exclusively in the William D. Ford Federal Direct Lending program (DL), which began in the 2010-2011. The change is due to the legislative change which eliminated FFELP lending to students and parents. All schools are being mandated to participate in the direct lending program.

The federal government sells Treasury Bills to fund the DL program. Students borrow directly from the U.S. Department of Education. DL Subsidized, Unsubsidized, and PLUS loans operate in essentially the same manner as in the FFELP program, except that there are no subsidies paid to lenders. Students receive the same basic interest rates and have similar repayment options. Payments are sent directly to the U.S. Department of Education’s servicer.

Direct Loans will provide the following benefits:

Eliminates the complexity of using multiple lender systems.
Eliminates the uncertainty of losing lenders and being out of compliance with federal regulations.
Eliminates the need for reprocessing loan for students when lenders leave the program.
Gives control over the origination of loan records.
Gives control over the disbursement of funds and return of loan funds.
Provides one lender and one payment for new borrowers.
Allows returning borrowers to consolidate FFLEP loans with their Direct Loans at repayment.
Provides a lower interest rate on the PLUS loan.

This is a significant processing change for the Financial Aid team. We appreciate your support and patience as we implement direct lending to better serve our students and parents.

For questions regarding Financial Aid you may contact us at: (541) 885-1280, or by email at: dollars@oit.edu.

Please see below for a list of Frequently Asked Questions about the transition to Direct Lending.

What are the benefits of the Direct Lending Program?

The Direct Loan Program offers:

· A guaranteed source of funding for federal student loans

· A single point of service for students during repayment

· Increased repayment options for students including interest rate reductions for on-time payments

· Public Service Loan Forgiveness Program

Why is Oregon Tech participating in the Direct Loan Program?

Congress passed reconciliation legislation eliminating the Federal Family Education Loan Program (FFELP) as of July 1, 2010.

Will I be able to continue borrowing through the same lender as prior to the switch to DL?

No. Beginning summer 2010, all Federal Stafford and PLUS loans will be processed exclusively through the Direct Loan Program.

What are the interest rates and fees of the Direct Loan Program?

The interest rate for the 2011-12 Federal Direct Subsidized Stafford loan is 3.4%; for 2012-13 the interest rate is 6.8%. The interest rate for the Federal Direct Unsubsidized Stafford loan is 6.8%. The Federal Direct PLUS loan interest rate is 7.9%.

What happens to the Stafford loans I borrowed prior to 2010? Will they still be deferred now that Oregon Tech changed its loan process?

Your Stafford loans from years prior to Summer 2010 will remain in deferment as long as you are enrolled at least half-time in your program.

How will repayment work if I have FFELP and Direct loans?

You can choose to consolidate your FFELP and Direct federal student loans into a Direct Consolidation Loan if you would like to make only one monthly payment. If you decide that you will not consolidate your federal loans into a Direct Consolidation loan, you will have to make separate payments to each of your lenders.

Will there be any additional forms that I must complete in order to receive a Direct student or parent loan?

Students need to fill out relevant FAFSAs for each academic school year and add Oregon Tech as a school on their FAFSA. Once we receive your FAFSA record, we will evaluate your application and send you an award notification. If you are a new Direct Loan borrower, you will have to complete a Direct Loan Master Promissory Note (MPN) on www.studentloans.gov with your FAFSA Pin number. Please see the following question and answer below for an explanation. Parents who want to borrow in the Federal Direct PLUS loan program will have to complete an Oregon Tech PLUS Loan Request form. The form is available to download from our Oregon Tech Financial Aid website at: www.oit.edu/faid and select Financial Aid Forms. If your parents choose to borrow a Direct PLUS loan, they will also need to complete an MPN on www.studentloans.gov with their FAFSA Pin number.

Once you have accepted your awards and completed the Direct Loan Entrance Counseling (new students only for entrance counseling) and MPN, your loans should be set to arrive in a timely manner. You are encouraged to check your financial aid information through Oregon Tech’s online student system (Web for Student) as well as read any and all correspondence you receive from the Financial Aid Office.

Why should I do Direct Loan Entrance Counseling after I accept my loans?

When a student completes a Direct Loan Entrance Counseling online, the Direct Loan Servicer stores that information so that it can be matched to a student’s loan record. The proprietary student information system that Oregon Tech uses allows us to find matches to student entrance interview information only once. We will create loan records and match those with entrance interview files after students accept their loans on Web for Student. If we cannot match your loan record with your entrance interview requirement, we may have to ask you to complete another online entrance interview.

Where can I find information about who services my other federal loans?

You can find information about the servicers of your other federal loans at: www.nslds.ed.gov . You will need your PIN number from the FAFSA to access this information.

Will I still be able to borrow alternative (private) loans through an outside lender?

Yes, if you meet the qualifications you will still be able to borrow private loans through an outside lender.

How can I consolidate my loans with Direct Lending?

For more information about loan consolidation go to: www.loanconsolidation.ed.gov Students cannot apply for a consolidation loan while attending school.

Do I have to sign a new Master Promissory Note (MPN)?

Yes, all new and continuing students will need to complete a new Direct Loan Master Promissory Note. Parents who want to borrow PLUS loans must complete new Direct Loan Master Promissory Notes also. You will need your FAFSA PIN number to complete the MPN. www.studentloans.gov

What is Public Service Loan Forgiveness?

The Public Service Loan Forgiveness Program was created to encourage individuals to enter and continue to work full-time in public service jobs. Under this program, you may qualify for forgiveness of the remaining balance due on your eligible federal student loans after you have made 120 payments on loans under certain repayment plans while employed full-time by certain public service employers. Only non-defaulted loans made under the William D. Ford Direct Loan Program are eligible for loan forgiveness.

The Direct Loan Program includes the following types of loans:

· Federal Direct Stafford Loans (Direct Subsidized and/or Unsubsidized Loans)

· Federal Direct PLUS Loans

· Federal Direct Consolidation Loans

Although loan forgiveness under this program is available only for loans made and repaid under the Direct Loan Program, loans made under other federal student loan program may qualify for forgiveness if they are consolidated into a Direct Consolidation Loan. Therefore, only payments made on the Direct Consolidation Loan would count toward the required 120 monthly payments.