Secretary Duncan Sends Letter to College Presidents
On October 26, Secretary of Education Arne Duncan sent a letter to presidents of schools participating in the Federal Family Education Loan (FFEL) Program, encouraging them to ensure their school is prepared to provide federal student loans to their students for the 2010-11 award year.

Lender Exits FFEL Program
Key Bank, one of the largest lenders in the FFEL Program, announced on October 8, 2009 that they will stop originating new FFEL loans, effective December 5, 2009.

Foreign Schools Team
The President's budget, and the proposals currently being considered by Congress, include specific provisions to allow non-U.S. colleges and universities to participate in the Direct Loan Program. In 2008-2009, over 400 foreign schools participating in the FFEL Program disbursed $735 million in loans.

To assist these schools transition to the Direct Loan Program in the event the proposals pass, we have established a Foreign Schools Direct Loan Transition Team. Further, we are developing a streamlined, one-stop web process for foreign schools to use when processing Direct Loans.

Beginning in January, training will be offered to help foreign schools learn the new process. Schools can contact the team with questions at fsa.foreign.schools.team@ed.gov


Direct Loan Peers
Are you considering the Direct Loan Program, but need some advice? Get insight directly from your peers. See our Direct Loan contacts list.

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Interview with Anna M. Griswold, Penn State

photo of Anna M. GriswoldThe Direct Loan Source had the opportunity to sit down with Anna M. Griswold, Assistant Vice President of Undergraduate Education and Executive Director for Student Aid at the Pennsylvania State University, to talk about Penn State’s recent transition to the Direct Loan Program.

Direct Loan Readiness

There has been much discussion about the risk of transitioning thousands of schools into the Direct Loan Program by the beginning of the next academic year. Most of the schools that have already made the transition to Direct Lending report having done so with few, if any, issues. The Department has ample capacity to transition all remaining schools before July 1. There is minimal transition risk if schools begin the process in the next few months.
  • Over 5,000 domestic schools currently make disbursements in either the Direct Loan or the FFEL Program. Of those, over 2000 schools currently participate in the Direct Loan Program.

  • Of the approximately 3000 schools currently participating in the FFEL Program, more than 2,800 currently participate in the Pell Grant Program and thus are familiar with the Common Origination and Disbursement (COD) System. This is the same system used to originate Direct Loans, and existing familiarity with the system greatly simplifies the transition process. In addition, more than 600 of these schools have officially notified the Department of their intent to participate in the Direct Loan Program and over half have registered for Direct Loan training in the coming month.

  • Of the less than 200 domestic schools not currently using COD, 36% have begun the transition process by registering for Direct Loan training.

2008-2009 Loan Purchase Program Summary

The Ensuring Continued Access to Student Loans Act (ECASLA) of 2008 authorized the Department of Education to purchase FFEL Program loans or participation interests in FFEL Program loans for the 2008-2009 academic year. On October 15, the Department closed out the 2008-2009 Loan Purchase Programs, purchasing $46.3 billion in FFEL Program loans. Another $3.8 billion in 2008-2009 FFEL Program loans were financed by the Department’s Asset-Backed Commercial Paper Conduit Program.  In all, the Department helped finance almost 82 percent of all FFELP disbursement volume in 2008-2009.

The Department continues to purchase participation interests and loans from FFEL lenders as part of the 2009-2010 Loan Purchase Programs. However, these programs expire on September 30, 2010, and there are no assurances that credit markets will support FFEL Program lending for the 2010-11 award year.


UPCOMING TRAINING OPPORTUNITIES
Are you new to the Direct Loan Program or curious to find out more about Direct Loan business processes? Federal Student Aid is offering instructor-led, online training sessions on Direct Loans. The webinar suite consists of six different 90-minute sessions related to key aspects of Direct Loan processing. For more information, access our Direct Loan Training Announcement.

Attend the FSA Conference

Don't miss this invaluable opportunity to receive all of the Direct Loan Training you need in one place. Also, learn more about the Title IV programs, FAFSA Simplification efforts, and the proposed Perkins Loan Program. Federal Student Aid’s fall training conference will take place Dec. 1-4 in Nashville, TN. For more information on this FREE conference visit www.FSAconferences.ed.gov
Department of ED seal

Questions? Additional information about the Direct Loan Program is available at www.direct.ed.gov. To view our Direct Loan Source archive, visit www.direct.ed.gov/newsletters.html.

We also have experienced staff prepared to answer your Direct Loan questions at dlenrollment_fsa@ed.gov. For information about Direct Loan processing, the COD School Relations Center can be reached at 800-848-0978.