Direct Loan Frequently Asked Question
> Direct Loan Frequently Asked Question

Direct Loan Frequently Asked Questions

  1. How will this affect my current loans?
  2. What do I have to do to get a Direct Loan?

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1. What are Direct Loans?

Direct Loans are Stafford and PLUS loans, similar to what we have offered in the past.  They are called "Direct" because the student and/or parent is borrowing directly from the U.S. Department of Education, as opposed to borrowing from a bank.

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2. Why is San Diego Christian College switching to Direct Loans?

For the 2008-2009 academic year and prior, SDCC participated in the Federal Family Education Loan Program (FFELP), a public-private partnership in which private, nonprofit, and state-based lenders make federally guaranteed loans to students and parents.  Due to the recent changes made by Congress to the FFEL Program, coupled with the current economic climate, a significant number of lenders have exited the program, limiting options and decreasing the number of benefits to borrowers.

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3. What are the benefits of Direct Loans?

Direct Loans provide a single point of contact through the Direct Loan Servicing Center for all student and parent borrowers, even if you receive Direct Loans at different schools.  Also, loans received from the U.S. Department of Education are never sold.  Your Direct Loan account provides you online access to your loan information 24 hours a day, 7 days a week.  After graduation, you can consolidate your Direct Loans with loans from other lenders, giving you one simple payment.  More information can be found at  Direct Loans also offer flexibility, allowing you to choose from several repayment plans designed to meet your needs.

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4. How will this affect my current loans?

The Stafford and PLUS loans you received while attending SDCC for the 2008-2009 academic year and prior will remain with those lenders.  They will not convert to Direct Loans.  Beginning with the 2009-2010 academic year, borrowers will receive new loans directly from the U.S. Department of Education.

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5. What types of Direct Loans are available?

The Direct Loan Program offers several types of loans for borrowers:

  • Subsidized Stafford Loans provide students with financial need as determined by federal regulations.  This subsidized loan will not accrue interest while the student is enrolled in school at least half-time, or during the student's grace and deferment periods.
  • Unsubsidized Stafford Loans, disbursed to students, are not need-based.  These loans accrue interest during all periods.
  • PLUS Loans are offered to parents of dependent (as determined by the FAFSA) college students to help meet college costs.

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6. What do I have to do to get a Direct Loan?

Your first step to receive a Direct Loan is completing a FAFSA (Free Application for Federal Student Aid).  Once all required paperwork is submitted and processed by the Financial Aid Office, you will receive an Award Packet containing detailed information for securing your Direct Loan.  The instructions will guide you in completing a Direct Loan Master Promissory Note (MPN), which explains the terms and conditions of your loan and is your legally binding agreement to repay the amount you borrow.  In addition, all Stafford loan borrowers are required to complete a Direct Stafford Loan Entrance Counseling session online.

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