John Carroll University will be changing its financial aid for the 2010-2011 school year.
The University will be switching from the Federal Family Education Loan Program to the William D. Ford Federal Direct Loan Program.
This change will include all federal Stafford, PLUS and Grad PLUS loans.
The major difference in the new Direct Loan program is that the lender in this program is the U.S. Department of Education.
“We’re going to see [with this program] a more secure source of loans for students,” said Claudia Wenzel, associate director of financial aid.
The previous FFEL program allowed students to choose between different bank lenders.
According to Wenzel, the office of financial aid decided in January to use a new loan program.
The decision to change loan programs was made when some of students’ loan lenders pulled out of the program due to the downturn in the economy and changes in federal loan laws. This caused problems for students because when lenders opted out of the program, students were left with no source for their loan.
Additionally, the application process for students will be simpler. Students will only deal with the University and not a third-party lender.
JCU will work with the U.S. Department of Education.
“Direct Loans do not sell loans to other companies, therefore students can avoid the confusion of signing paperwork with different lenders, locating loan holder information or losing a lender altogether,” said Wenzel.
With the new Direct Loan program, loan fees will be reduced so that students receive a greater disbursement of their loan. Previously 1.5 percent of the total loan went to the lender. The loan fee for the new program will be reduced to 0.5 percent, giving students more proceeds from the loan.
The Direct Loan program will provide students with more timely revisions to loans and funds will be credited to student accounts more quickly.
In order to apply for the loan, students must first complete a new Federal Direct Master Promisory Note and Federal Direct Entrance Counseling form because the Direct Loan program is a new program at JCU. Both forms can be found on JCU’s financial aid Web site, www.jcu.edu/aidjcu/loans/, under “Stafford Loans.”
Wenzel said the process to complete the two forms will take students approximately 20 minutes.
In addition to the two forms, students must still fill out their Free Application for Federal Student Aid, which is the same form that students had to fill out with the previous loan program. Students still have time to fill out the FAFSA form to receive financial aid for next year.
According to Wenzel, transfer students for the Spring 2010 semester were used as a test group for the loan program and it worked well.
To help the transition to the new program, a letter will be sent to students’ homes later this week detailing the steps that must be taken to secure a loan.
“We have plans to remind students of what needs to be done all along the way. We want to continue to partner with students to make the financial aid process, and ultimately the billing process, as simple and straight forward as possible,” said Wenzel.
Students can start the process of obtaining the loan now.
“We really want to be proactive about this and get the word out to students now,” said Wenzel.
The office of financial aid is also changing the way they communicate with students. Students will receive notification of their financial aid reward via e-mail. Students will then be able to view their final aid package in BannerWeb.
Wenzel said, “This change in loan programs comes with some tangible improvements to the loan process for students but will require some action on their part.”