FAQs for Direct Loan Program

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1. Why is Wilkes University entering the Federal Direct Loan Program?
Wilkes is moving to the Direct Loan Program to ensure access to federal student loan funds for students and parents. This is the program required to be used by the U.S. Department of Education.

2. When does the Direct Loan program begin at Wilkes?
Beginning with the 2010-2011 academic year, Wilkes will no longer participate in the FFELP program where students and parents borrowed federal loans through a private lender.  Instead, loans will be available from the Direct Loan program, where the lender is the federal government.  This will begin with the Fall 2010 loan term, and may include some late summer loans.

3. What are the primary differences between Direct Loans and the former (FFELP) program?
The primary difference is the source of the loan itself.  Direct Loans come from the U.S. Department of Education using funds from the U.S. Treasury.  

4. Can I borrow a federal loan through both programs (Direct Loan and FFELP)?
No, because Wilkes has made a decision to participate in the Direct Loan program.  All federal loans borrowed beginning in Fall 2010 and forward will be through the Direct Loan program.

5. What types of Direct Loans are available?
The same types of loans are available under this program as with the prior program.  These are:

•    Subsidized Stafford Loans for students with financial need as determined by federal regulations.  No interest is charged while you are in school at least half time, during the grace period, and during deferment periods.

•    Unsubsidized Stafford Loans for students which are not based on financial need.  Interest is accruing immediately until paid in full.  Interest may be paid at any time or capitalized (added to your balance).

•    Parent PLUS loans are available to parents of dependent undergraduate students.  The loan may cover up to the full cost of attendance less other aid received.  Eligibility is based on credit worthiness.

•    Graduate PLUS loans are available to graduate students who demonstrate credit worthiness.  Students are required to first utilize Stafford loans first.

6. How much can I borrow through the Direct Loan program in Stafford loans?

Loan limits are the same for both programs.  
Stafford annual loan limits are:

*For Graduates and Professionals: Up to $20,500 each academic year

Aggregate (lifetime) loan limits are:

7. What are the eligibility requirements?
Students must be enrolled at least half time in a degree seeking program and must meet general eligibility requirements for federal student aid.  For the Parent PLUS and Graduate PLUS programs, borrowers must pass a credit check.

8. How do I apply for the Direct Loan program?
First, you must complete the Free Application for Federal Student Aid (FAFSA) and indicate that you wish to be considered for a loan.  Wilkes will then review the application and notify you of your eligibility and the maximum loan amount.  Additional information regarding the Parent PLUS loan application process will be forthcoming.

9. Will a new Master Promissory Note (MPN) need to be completed?
Yes.  Information regarding how to do this will be forthcoming.

10. What are the interest rates and fees for these loans?
Interest rates are currently set as follows:

Direct Subsidized Loans for Undergraduate Borrowers:

Unsubsidized Loans:    6.8%
Direct PLUS for Parents and Grad/Professional Students:    7.9%
Direct Consolidation Loans:    Weighted average w/ 8.25% cap

Fees and interest rebates are currently:
Direct Subsidized and Unsubsidized Loans

*PLUS fees will be 4.0%, with an up-front interest rebate of 1.5%

11. What will happen if some of my federal loans through the FFELP and some are through Direct Loans?
A combination of FFELP and Direct Loans is not unusual.  While you will have different servicers for each type of loan, they will clearly advise you on repayment plans and the process to follow to make your payments.  In order to make payments to one location once your repayment begins, you may apply for a federal consolidation loan which combines both types of loans into a single loan.

12. What if my loans are not consolidated?
Your loan servicers for each type of loan will send information about repayment and notify you of the date repayment will begin. You will make separate monthly payments to each of the servicers.

13. How does the Direct Consolidation Loan process work?
Once you graduate or choose to no longer attend school on at least a half time basis, you can contact the Direct Loan program for an application for a Consolidation loan.  When it is time to begin repaying the loans, you may call the U.S. Department of Education Consolidation Department at 1-800-557-7392 or go to www.loanconsolidation.ed.gov.

14. What type of repayment plans are offered through the Direct Loan program?
There are many repayment plans offered in order to help you pay back your student loan.  Remember, the less time it takes you to pay the loan in full, the less interest you will be charged over time.  For a complete list of repayment options, visit www.dl.ed.gov/borrower, click on FAQ on the left side and then select Repayment Options.

15. Who will service the Direct Loans?
These loans will be serviced by the designated Direct Loan Servicing Center as determined by the U.S. Department of Education.

16. Who do I call about repayment questions?
Direct Loan Servicing Center customer service representatives are available Monday-Friday, 8:00 a.m. EST-8:30 p.m. EST at 1-800-848-0979.

17. How can I keep track of all my federal student loans?
It is recommended that you visit the National Student Loan Data System (NSLDS) website at www.nslds.ed.gov.  NSLDS provides a central database for student aid and allows students access to view information from schools, guaranty agencies, the Direct Loan program, as well as other programs.  This is a valuable tool in managing your student loans.  You will need the same PIN you used when you completed your FAFSA.  If you have lost your PIN, you can request a duplicate at www.pin.ed.gov.