Duke University to get a head start on participating in the Federal Direct Student Loan Program

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Duke University recently announced that they will begin participating in the Federal Direct Student Loan Program next fall. One of the few private universities that practices a need-blind admissions policy, Duke has a history of continually striving to increase financial aid to its students.

The Federal Direct Student Loan Program is funded by the US Department of Education. It provides loans for education after high school, including the well-known Stafford and PLUS loans. Currently, Duke participates in the FFEL (Federal Family Education Loan) program. Student Aid on the Web makes the following distinction between the two programs:

"Under the Direct Loan Program, the funds for your loan come directly from the federal government. Funds for your FFEL will come from a bank, credit union, or other lender that participates in the program. Eligibility rules and loan amounts are identical under both programs, but repayment plans differ somewhat."

Duke's motivation in switching programs stems from their commitment to satisfying 100% of student need. They anticipate the FDSL program reducing the time families spend on shopping around for private lenders, as well as reducing the paperwork at the office of financial aid. The FDSL program also guarantees that loans will never be sold and offers flexible repayment plans after graduation.

The Federal Direct Student Loan Program has been endorsed by President Obama. Under his new budget, all new loan originations will be under the Direct Loan program by July of 2010. This change is part of Obama's attempt to reform the student loan program and eliminate the subsidys that are paid to the private lenders under the FFEL program.

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