Direct Loan program saves government money

Stafford & PLUS loans are administered under either the Federal Family Education Loan (FFEL) or William D. Ford Direct Loans Program. FFEL loans use funds provided by banks and credit unions while the Direct Loans program saves the government millions of dollars a year, but not borrowers. Pennsylvania residents borrowing under the KeystoneBEST program do not pay the standard 3% origination and guarantee fee that is charged by Direct Loans and can receive a 1% rebate of loan principal at graduation.

Unfortunately, parents and students have no choice but to use the direct loan program if they are attending a direct lending school. Visit your school’s financial aid Web site or call them to find out if they participate in the Direct Loans Program, the FFEL program or both!

Direct Loan borrowers MUST follow the application instructions from their school. Schools should send the student information by mail or email on how to apply online.

If your school participates in the Direct Loan program processing can be handled in two ways:

The school provides the student with a Promissory Note and instructions to complete entrance counseling (This is rare.)

The school directs students to www.dlssonline.com/borrower/EntrCounselingStart.do to complete entrance counseling and dlenote.ed.gov for their Master Promissory Note (MPN).

As most schools have moved origination online we will not review the first option, except to say that affected clients are welcome to contact us for more information.

Please be sure that your school does not have their own Stafford Entrance Counseling program. Most rely on the government system but since schools have so much control in this program, they may use a proprietary system.

The DL E-Note system allows students to complete the Stafford application online in only a few minutes. Students MUST have a student aid PIN. (Most do. If you need to apply visit www.pin.ed.gov)

Schools must certify a student’s eligibility before the MPN can be submitted. If the MPN system does not accept a student’s credentials, chances are the school has not completed this step yet.

Many schools wait until July 1 to pre-certify eligibility. Check with our office or your school’s financial aid office for more details.

Parents should use the same DL E-Note web site for Direct PLUS applications. There is no entrance counseling requirement for PLUS loan borrowers.

Remember, the parent is the borrower on the PLUS loan so be sure to enter the proper credentials when logging in. Parents will also need a FSA PIN to complete the online application.

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Some schools, like Penn State, have sophisticated Web portals that allow students to complete Direct Loan processing via a school Web site. Be sure to carefully review instructions from your school or contact us for more information.