About Direct Loans
The Direct Loan Program was created to simplify federal student loan delivery and provide borrowers with flexible repayment options with a single loan holder. Before Direct Loans, students and schools were forced to deal with a time consuming, abuse prone and complex student loan process, consisting of more than 7,000 lenders, 65 secondary markets and 35 guaranty agencies.
Direct Lending has revolutionized federal student loan delivery by providing borrowers and participating schools with a simple, streamlined and accountable system that saves taxpayers billions of dollars. Borrowers benefit from the simplicity of the program and such features as income contingent loan repayment, which, over time, may result in lower default rates and, reduced administrative burdens for university financial aid departments.
The Health Care and Education Reconciliation Act of 2010 established the Direct Loan Program as the single federal loan delivery system effective July 1, 2010. Federal Student Aid (FSA) worked diligently to assist schools in making the transition to Direct Lending. The National Direct Student Loan Coalition worked closely with FSA during the transition and Coalition members mentored over 1,000 schools helping them make a smooth transition to direct lending.
FSA and the Coalition continue to work together to assure that the Direct Loan Program functions efficiently. In regular meetings with FSA staff, members of the Executive Council of the Coalition present issues identified by schools and discuss options for issue resolution and suggestions for operational procedures that support efficient loan delivery. The DirLoan2 list serve, maintained by the Coalition, provides schools with a venue to ask questions, identify issues and offer advice to colleagues.
The National Direct Student Loan Coalition serves all schools participating in the Federal Direct Loan Program but relies on the financial support of our contributing members.