Direct Loans

New York Institute of Technology Converts to the Federal Direct Loan Program

 

Beginning with the 2009 - 2010 financial aid academic year, New York Institute of Technology (NYIT) is pleased to announce that it will be processing all federal student loans through the William D. Ford Federal Direct Loan Program. New York Institute of Technology is currently participating in the Federal Family Education Loan Program (FFELP) for the Stafford and PLUS loan programs. After careful research and comparison, a small pilot program was instituted in the fall 2008 for the Federal Direct Loan process to determine if this change would benefit NYIT students. Statistics and student feedback have proved this pilot to be a success.

The Federal Direct Loan Program is the better choice for our students. The Federal Direct Loan Program is more straightforward and easier to navigate for students, enables faster processing and turnaround time, and perhaps most importantly, has many economic advantages for borrowers in comparison to the FFELP. Furthermore, the stability and availability of funding through the Federal Direct Loan Program is guaranteed from the United States Government.

The volatile credit markets and recent revisions in federal law have significantly decreased the number of private lenders and servicers offering Federal Stafford and PLUS loans through the FFELP. Additionally, these private lenders and servicers cannot meet the expenses of offering discounts and incentives for borrowers that in the past made it desirable to borrow from the FFELP. A major difference between FFELP and the Federal Direct Loan Program is:

FFELP

  • Students choose lender for loan
  • Lenders could be serviced by another organization
  • Loans need to be guaranteed by another agency

Federal Direct Loan Program


Reasons for Conversion

  1. Stability and availability of funding
  2. One place for students to apply, track, and pay for their federal student loans
  3. All students have the same requirements and benefits for their federal student loans
  4. Loans are from the same government organization that deals with student loan consolidation (Department of Education)
  5. Less fees incurred to borrowers on receipt of their loans
  • The net fee for Stafford loan is .5% in the Federal Direct Loan Program compared to 1.5% in the FFELP
  • The net fee for PLUS loan is 2.5% in the Federal Direct Loan Program compared to 4% in the FFELP
  • The interest rate for PLUS loan is 7.9% in the Federal Direct Loan Program compared to 8.5% in the FFELP

Conversion to the Federal Direct Loan Program is REQUIRED for ALL STUDENTS who previously were in the FFELP. All students who wish to receive any federal student loans for the 2009 - 2010 academic year will need to apply through the Federal Direct Loan Program. Students may still borrow private loans from any lender they choose.

Steps in Applying for Federal Student Loans in the Federal Direct Loan Program

  1. Complete the FAFSA
  2. Complete and return your award letter by fax, mail, in person, or via online at NYIT Connect
  3. PLUS loans also require a credit check form to be completed (Graduate PLUS and Parent PLUS)
  4. Complete appropriate Master Promissory Notes (First-time Direct Loan Borrowers Only)
  5. Complete appropriate Federal Direct Loan Entrance Counseling (First-time Direct Loan Borrowers Only)
  6. Complete any other necessary documents the Office of Financial Aid may require. (Authorization Statement, Verification, etc.)

For further information regarding the Federal Direct Loan Program visit the United States Department of Education online for information about the program themselves.

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