Direct Lending Student Loan Program

Effective July 1, 2010, City University of Seattle will be moving to the William D. Ford Federal Direct Student Loan Program.

Why? The university has been using the bank-based Federal Family Education Loan Program (FFELP) for more than a decade, but on March 15, 2010, the President Obama signed into law the College Lending Bill prohibiting banks and private lenders from issuing federal loans. Effective July 1, 2010, all federal student loans are required to go through a federal direct loan program.

What is the difference between these two loan programs? Under the Direct Student Loan Program loans are made by the U.S. Department of Education. In the FFELP program, loans were made by private lenders (i.e. banks) who made federal loans in return for federal subsidies.

How will this change impact you? For the student, the process for obtaining student loans will be the same. You will still be required each year to file an annual Free Application for Federal Student Aid (FAFSA) to determine eligibility. The difference will be with whom you sign a promissory note. Just as you did under the FFELP program, you will be required sign a new promissory note with the Department of Education before obtaining your first direct loans. For your convenience, you will be able to complete your promissory note through an on-line service.

What do you need to do next? If you have not already done so, go to and complete a 2010/2011 application. Then keep an eye out in your mailbox for a letter from CityU's Financial Aid Office in late April that will provide you information on how to complete your electronic promissory note for the Direct Student Loan Program.

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