What are the primary differences between Direct Lending (DL) and FFELP?
A. The primary difference is the source of the loan funding. Direct Loans come straight from the U.S. Department of Education using funds obtained from the U.S. Treasury. This program offers you one single source of contact since the loans are guaranteed and serviced by the U.S. Department of Education. In the FFEL Program the lender, guarantor, and servicer can involve any combination of banks and agencies across the country. It is often the case that the FFEL student’s lender will sell their loan to another lender or loan servicer. This can add complexity for students, especially in the event an error or problem in the processing of their loans should occur. The student and the school must first find out who is processing and servicing the loan to even begin to solve a problem. Under DL, there is a single point of contact for students and the school to turn to with any problems that might arise.
The primary difference is the source of the loan funding. Direct Loans come straight from the U.S. Department of Education using funds obtained from the U.S. Treasury. This program offers you one single source of contact since the loans are guaranteed and serviced by the U.S. Department of Education. In the FFEL Program the lender, guarantor, and servicer can involve any combination of banks and agencies across the country. It is often the case that the FFEL student’s lender will sell their loan to another lender or loan servicer. This can add complexity for students, especially in the event an error or problem in the processing of their loans should occur. The student and the school must first find out who is processing and servicing the loan to even begin to solve a problem. Under DL, there is a single point of contact for students and the school to turn to with any problems that might arise.
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