Jan 26, 2010

Liberty adopts direct lending program for fall 2010

by Amanda Sullivan

Liberty University students who are returning to school in the Fall 2010 semester will experience a change in they way they apply for student loans. Students will no longer be able to borrow from the Federal Family Educational Loan Program (FFELP), but will be required to turn loan applications in through the Direct Lending Program, which is controlled by the U.S. Department of Education. In other words, students who are used to having Sallie Mae or other common companies or banks as a lender will no longer have such an option in the fall semester for federal loans.

The added practices will require students to add two extra steps to their loan process next fall.

“The two main areas where (students will be affected) is that they will have to complete a new Master Promissory Note (MPN), which will stay the same for their whole college career … and they will have to complete a new entrance interview,” Executive Director of Financial Aid Rob Ritz said.

The recent decision will not affect students’ lending process for the current spring semester and upcoming summer semester.

“Anyone taking out a loan for the spring (2010) and the summer should just go through the lender they normally use, and all of our lenders are still listed. But beginning Fall 2010, those lenders will disappear — they won’t be on the Web site. It’ll only be one federal government’s loan note and one federal government’s interview,” Ritz said.

Liberty’s decision to switch to the Direct Lending program rested on the fact that the House passed HR 3221, which means that “all lending will be national and all schools have to move to it by July 2010,” according to Ritz.

“It’s not the Senate, and it’s not been signed by the President. But you can see where it’s heading, and they were moving pretty aggressively until the health care legislation push,” Ritz said.

Additionally, Liberty is forced to consider the economic status of America, directing administrators’ attention to financial burdens many lenders are encountering.

“Because of the economy, some lenders have decided to pull out of the program and put (their) people in some other business other than student loans,” Ritz said. “Others have stayed and cut their staffs, so customer service is going downhill. So students will struggle more with customer service.”

“The trend is going (towards Direct Lending), so the question is do we want to get in front of it and be proactive or wait until it happens,” Ritz said. “We wanted to get our students to move to the more stable program and make sure it stays stable for them.”
Because of the Direct Lending changes, Liberty is working to accommodate the changes in needs for all 27,100 students by supplying them with a wealth of information pertaining to the situation, according to Ritz.

“We are going to have reach out meetings, where we go into dorms and into the cafeteria. We are in the middle of printing an information card that will be used as a poster. We are in the process of designing a call campaign for our online students to give them a proactive call instead of waiting for them to call us,” Ritz said.

Liberty’s Financial Aid Department has developed a plan to make the transition easier on students by creating additional Web pages and providing announcements in future convocations. The new Web pages were launched on Tuesday, Jan. 19 and had received more than 2,500 hits as of Thursday, Jan. 21.

“We’re going to do an announcement in convocation, and we’ve already developed two Web pages: one for the MPN and the entrance interview and the other for Q&A,” Ritz said.

Many students currently enrolled at Liberty will have both FFELP loans and Direct Lending loans, which has the potential to make repayment confusing.

“I recommend that students, (who have both FFELP and Direct Lending loans), contact the government and consider consolidation,” Ritz said. “There’s good and bad to it. It’s nice because it simplifies things. Sometimes it’s not nice because you may be paying over a longer amount of time and more interest.”
“As a university, we don’t recommend anything specific except that (students) do the analysis with their lender and consider it,” Ritz said.

For more information on the Direct Lending program, visit the Financial Aid’s Web page on Liberty’s Web site at liberty.edu/direct.

Contact Amanda Sullivan at
amsullivan3@liberty.edu.


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