All new and returning students applying for fall 2010 financial aid at Syracuse University and planning to borrow a federal student loan are required to participate in a new Direct Loan program mandated by the Student Aid and Fiscal Responsibility Act.

As SU students apply for financial aid for 2010-11, they must now file a Federal Direct Loan Master Promissory Note, said Kaye DeVesty, director of the Office of Financial Aid and Scholarship Programs. The note is required to receive loans through the new program and must only be filed once while the student is at school, she said.

Universities across the United States are participating in the new program. The House of Representatives passed the act last September, and President Obama finalized the program March 30 by signing the final budget reconciliation bill as the last piece of the Democrats’ health care reform. Included in the reconciliation bill is the overhaul of federal student loan programs that will save taxpayers almost $68 billion over the next 11 years.

The new program ends government subsidies to private lenders and provides students with guaranteed loans from the U.S. Department of Education using funds obtained from the U.S. Treasury.

For the 2010-11 school year, SU is participating solely in the William D. Ford Federal Direct Loan program, offered to universities by the Department of Education, according to the Office of Financial Aid and Scholarship Programs’ website. Non-Direct Loan schools must submit an Electronic Application for Program Participation to join the new program.

DeVesty said the financial aid office has tried to inform students about the new requirement of the promissory to the best of its ability and has thus far not received complaints or too much confusion. She said students ‘are taking it in stride so far.’

Jesse Feitel, a freshman broadcast journalism major, said filling out the promissory note was more difficult than he had anticipated.

“I wasn’t able to recall the PIN number that I made a year ago,” he said. “And it was a real hassle to try and create a new one, especially because I was too busy to set aside time to call.”

Despite complaints from student lenders surrounding the new Direct Loan program, DeVesty said the program was strong now. Before the upcoming 2010-11 school year, SU had many lenders and now the Department of Education is the school’s lone lender, which “provides some stability in the program,” she said.

SU also requires the College Scholarship Service/Financial Aid Profile and Free Application for Federal Student Aid to be completed each year, but neither of these applications will change because of this new program. Both applications were due April 15 and the Office of Financial Aid and Scholarship Programs will soon send out a reminder to students who didnÕt fill out the promissory note yet, DeVesty said. Depending on when students complete their financial aid tasks on their MySlice account, awards will be sent out to returning students in late May or early June, she said.

SU currently participates in the Federal Family Education Loan Program that allows students and parents to borrow from private lenders and banks. Through the old program, students could borrow a Federal Stafford or Federal PLUS Loan through a private lender, according to the Office of Financial Aid and Scholarship Programs’ website. Students who borrowed last year and will be borrowing next year have to pay two separate lenders, according to the website.

As long as students are enrolled in school on at least a half-time basis, the previously borrowed Stafford Loans will continue to be deferred, DeVesty said.

“If loans weren’t deferred, I couldn’t afford to go to college, especially a school like Syracuse,” said Jacob Klos, a sophomore mechanical engineering major.

The shift to federal Direct Loans has been planned for months, and SU is ready for the change, DeVesty said.

“It’s a secure way to get funding for our students,” she said. “Because we used to work with many lenders, we had to change.”

In addition, the government has also increased the amount students can borrow each year and expanded repayment methods, DeVesty said.

Pell Grants will also directly benefit from the new program, and that’s definitely a good thing, she said. The White House said the new law will increase the maximum Pell Grant to $5,975 from $5,550 by 2017 and will provide 820,000 more grants three years after that, according to an article published in The New York Times on March 30.

Starting in July 2014, students who borrow federal Direct Loans will be able to cap repayments at 10 percent rather than the current 15 percent. If those students keep up on payments, their balances will be met after 20 years rather than 25 years, according to the article.

The interest rate of the new program at SU is 7.9 percent, while the previous Federal Family Education Loan Program, or FFELP, loan rate was 8.5 percent, according to the Office of Financial Aid and Scholarship Programs’ website.

Published on April 27, 2010 at 12:00 pm

Contact Jon: jdharr04@syr.edu