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Direct Loan Program Overview. Agenda. What is the Direct Loan Program? What is the student’s role? What is the school’s role? What is FSA’s role? How does the Direct Loan process work? What are the benefits for borrowers? What resources are available for schools?.

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Agenda l.jpg

  • What is the Direct Loan Program?

  • What is the student’s role?

  • What is the school’s role?

  • What is FSA’s role?

  • How does the Direct Loan process work?

  • What are the benefits for borrowers?

  • What resources are available for schools?

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What is the Direct Loan Program?

  • The Department of Education is the lender

  • Provides funds for Stafford and PLUS loans

  • Provides Consolidation loans

  • Provides borrower services to include: eMPN, online Entrance/Entrance Counseling, and repayment options

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What is the Direct Loan Program?

  • Standard, Graduated and Extended Repayment Plans

  • Income Contingent Repayment Plan (ICR)

  • July 1, 2009: Income Based Repayment Plan (IBR)

    • Note: ICR and IBR are not available to Direct PLUS borrower applicants

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What is the Student’s Role?

  • Complete FAFSA, establish and maintain eligibility

  • Complete entrance/exit counseling

  • Notify school or DL Servicer timely of relevant changes

  • Repay loan(s)

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What is the School’s Role?

  • Document Student Eligibility

  • Encourage student awareness; entrance/exit counseling

  • Originate/Award loans

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What is the School’s Role?

  • Manage MPN process

  • Draw down Direct Loan funds via G5

    • “Pushed Cash” option also available

  • Disburse funds to students

  • Update NSLDS enrollment status

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What is the School’s Role?

  • Transmit loan origination, disbursement, and adjustment data to COD

  • Reconcile with ED on a regular basis and complete annual close-out

  • Determine staffing roles and responsibilities

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What is the School’s Role?

  • Use of third-party servicer?

  • Determine MPN processing options

  • Determine software options

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What is FSA’s Role?

  • Track school eligibility

  • Provide funding (G5)

  • COD processing

  • Tools and reports

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What is FSA’s Role?

  • Reconciliation and Closeout assistance

  • Training and customer service for schools

  • Loan servicing/customer service for borrowers

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What are the Loans?

  • Stafford Subsidized

  • Stafford Unsubsidized

  • PLUS

  • Grad PLUS

  • Consolidation

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What are the Limits?*Effective July 1, 2008

*based on HR 5715 signed into law May 7, 2008

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What are the Limits?

  • Graduate and professional students:

    • $20,500 ($8,500 maximum subsidized) for all years

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What are the Interest Rates?

  • Direct Subsidized Loans for Grad students:

    • 6.8% fixed interest rate

  • Direct Unsubsidized Stafford Loans:

    • 6.8% fixed interest rate

  • Direct PLUS and Grad PLUS:

    • 7.9% fixed interest rate

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What Fees are Charged to Borrowers?

  • Origination fee for Subsidized and Unsubsidized loans first disbursed on/after 7/1/2007 and before 7/1/2008:


  • For Sub/Unsub loans first disbursed on/after 7/1/2008 and before 7/1/2009:


    *A 1.5% up front interest rebate also applies, to be covered under borrower benefits

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What Fees are Charged to Borrowers?

  • Direct PLUS, regardless of first disbursement date, origination fee for all loans:


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Originate Loan

School confirms eligibility, determines loan award and creates student record

School Originates a Direct Loan when it sends Direct Loan Award and Disbursement data to the COD system

School uses batch record process or COD Web site to create records


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Originate Loan

  • COD processes/edits and returns response

  • School corrects errors and resends to COD

  • School makes adjustments and sends to COD as needed

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PLUS Loan Origination

  • Includes credit check

    • GRAD PLUS borrower must complete FAFSA

    • PLUS MPN includes authorization for credit check by COD

    • Preliminary Credit check can be initiated by school at COD website, with signed authorization

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PLUS Loan Origination

  • Establish school policies for handling credit denials

    • Availability of additional unsub for dependent student with parent denial

    • Early determination of parents unable to meet criteria

    • Bypass credit check and document reason for parent inability to meet criteria

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Master Promissory Note

  • Paper MPN vs. eMPN

    • Borrower cannot be required to use eMPN

    • Several options for printing paper notes

  • Multi-year vs. Single year

    • Use Multi-year feature for some or all students

    • Borrower may decline multi-year feature

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Master Promissory Note

  • Electronic MPN

    • School sets up profile

    • Specify capability to file eMPN before origination

    • School specific message

    • May use eMPN from another school

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Master Promissory Note

  • School print vs COD print options:

    • COD prints MPN and sends to school or to borrower

    • School sends blank MPN to borrower

    • School sends MPN with preprinted data to borrower

    • School prints MPN to ED specifications and provides to borrower

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Master Promissory Note

  • School prints MPN

    • Follow review guidelines

    • Ship to MPN processor

    • Rejected MPN’s returned for correction

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Funding and Disbursements

  • Schools use G5 System to

    • View current funding information

    • Request payments and adjust drawdowns (Advance Pay schools)

    • Return cash

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Funding and Disbursements

  • Schools receive DL funds in one of two methods:

    • Advance Funded

    • Pushed Cash

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Funding and Disbursements

  • Transmission of funds to the school

    • ACH (Automated Clearinghouse)


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Funding and Disbursements

  • Advance Funding

    • Schools receive initial Current Funding Level (CFL)

    • May request funds before/after disbursing aid

    • School submits Actual Disbursement Records to COD to substantiate drawdown

    • CFL increases when accepted disbursements show need for additional funds

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Funding and Disbursements

  • Advance Funding

    • Take into account funds on hand and adjustments well as upcoming disbursements

    • DL disbursements based on Net loan amount, not gross

    • Pending Disbursement List from COD

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Funding and Disbursements

  • Pushed Cash

    • Schools do not request funds through G5

    • Amount based on accepted actual disbursements from school

    • COD sends funds via FEDWIRE or ACH

    • Submit no earlier than 7 days prior to disbursement date

    • Funded Disbursement List issued daily

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Funding and Disbursements

  • Effective March 15, 2008

    • Must have an accepted MPN in place before disbursements

    • COD will reject any disbursements for loans without an accepted MPN

    • Affects both Advance Funding and Pushed Cash Schools

    • Affects all award years

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Funding and Disbursements

  • “Booked” Loan:

    • Accepted Origination record

    • Accepted signed MPN

    • Accepted Actual Disbursement

    • Is now a binding obligation between borrower and ED

  • 30-Day Warning Report

    • ID’s unbooked loans for school

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Funding and Disbursements

  • Same disbursement requirements as other Title IV aid

    • Credit student’s account

    • Pay credit balances within time frames

    • May pay student/parent cash, check or EFT

      • Stored value and debit cards are a form of EFT

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Funding and Disbursements

  • Returning Direct Loan funds

    • Excess cash (unable to disburse within 3 business days

    • Return overpayment of DL funds

    • Borrower wishes to cancel all or a portion of disbursement

  • Return using G5 or by check

    • Remember to update COD record

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Funding and Disbursements

  • Accepted actual disbursements at COD:

    • Result in Current Funding Level (CFL) increase for Advance Funded schools

    • Pushed disbursements to Pushed Cash schools

  • Timely reporting of actual disbursements for Advance Funded schools avoids “Freeze Cash”

  • COD screens provide 24/7 view of current funding and disbursement status

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  • Monthly basis

    • School reconciles internally, FAA and Business offices

    • School reconciles externally with COD

  • Aids to Reconciliation:

    • School Account Statement (From COD)

    • Direct Loan Tools Software (FSA Download site)

    • COD screens and reports

    • COD Reconciliation specialists

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Choose program and year

Summary financial info

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Program Year Close-out

  • Process is complete when:

    • School and COD show a cash balance of $0 and

    • All COD records match all school DL record and business office system transactions,


    • School Account Statement reflects a $0 unbooked balance.

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Program Year Close-out

  • COD and FSA assist with reports and screens:

    • School Account Statement

    • Cash Activity

    • Ending Cash Balance

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SAS Cash Summary

Do the totals match school records?

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SAS Disb Detail

Match School Records?

Missing Data?

Any Unbooked?

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COD Processing

Central Processing System (CPS)


Loans and Disbursements








Verify valid ISIR



Electronic Entrance & Exit Counseling



Originations, Disbursements & Paper MPNs


Loans and Disbursements

Enrollment Status

Funding Data and

Payment Requests

Funding Request

Student data



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What Are the Benefits for Borrowers?

  • Up Front Interest Rebate

    • Equal to 1.5% of loan amount

    • Increases net amount to borrower

    • To retain, must make initial 12 required payments timely

  • Electronic Debit Account incentive

    • .25% interest reduction to use EDA for repayment

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Borrower Services Online

Provides over 6 million student borrowers with highly secure on-line services for:

Question Center

Online information resource for borrowers

Spanish/English Options

Entire site available in Spanish

Your Account

View live account data and manage loans online

Download Forms

Download loan-related forms directly, avoiding the time and expense of mailing

Loan Consolidation

Consolidate existing loans into a single Direct Loan

Online Billing & Payment

Receive bills and correspondence electronically, make payments online


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Borrower Services Online

Account Information

Borrowers are provided with the amount of their total indebtedness (Direct Loans, FFEL, and Perkins) during Exit Counseling or from the Account Summary page.

Exit Counseling

Click here to view your Non-Direct Loans


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Borrower Services Online

Repayment Options

  • Borrowers may select one of our four repayment plans:

    • Standard

    • Extended

    • Graduated

    • Income Contingent

    • Repayment (ICR)

  • Borrowers may also select from any of the four available due dates:

  • 7th, 14th, 21st, or 28th


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Borrower Services Online

Bills and Payments

Direct Loan borrowers can receive their bills and make payments online; and they can choose to receive their Direct Loan correspondence electronically, all for free.

381,227 online payments were made during the month of July for a grand total of $96,065,817.69.


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Borrower Services Online

Electronic Debit Account

958,200 borrowers are receiving a .25% incentive by enrolling in EDA!

Borrower feedback:

I just wanted to congratulate you on providing an excellent way to manage my student loan account. I cannot tell you how much simpler it is for me, knowing I can do everything I need on-line. I don't have to mail anything or call someone -- I just need to log in. - Troy


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Borrower Services Online

Online Form Submission

Borrowers can submit Unemployment Deferment and General Forbearance applications online.


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Borrower Services Online

Entrance Counseling


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Borrower Services Online

Exit Counseling


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General Federal Student Aid Information (800) 433-7327

COD School Relations-Applicant Services

(800) 557-7394

Direct Loan Servicing Center – Borrower Services (800)848-0979

 Direct Loan Consolidation Center (800) 557-7392

Federal Student Aid Ombudsman (877) 557-2575

Direct Loan Information

Call Center Resources for Borrowers


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Call Center Resources for Schools

COD School Relations Center 848-0978

School Services – Direct Loan Servicing 877-7658

Direct Loan Consolidation Center 557-7392


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School Services Online

Account Lookup

View live account data for students including balances, account status, separation dates, and more.

DL Servicing Resources

Web Site Help

General Information

Contact Us

Reporting Tools

Exit & Entrance Counseling Reports

Identify students who have

completed Counseling Online

Delinquency Reports

Detail, Summary, Late Stage Delinquency, and Borrower History

Email Subscription

Receive email notifications when reports are available online



Login to Servicing is through COD


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School Services Online

Direct Loan Servicing School Site


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School Services Online

Click here to see Repayment Estimates

Student Account Lookup


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School Services Online

Delinquency Reports

Summary Delinquency Report

Late Stage Delinquency Report


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Training Resources

  • COD Computer Based Training

    • Includes DL Reports session

    • eMPN simulation session

  • EDExpress Web-based training

    • Self-paced training for users of EDExpress and EDconnect

  • Both available at IFAP

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Training Resources

  • Interactive Online Training

    • Webinars on various DL topics

    • Watch for DCL “ANN” announcements

    • Register at TFAP

      • From IFAP select “School Portal Features”

      • Select “Training” from drop down list

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Training Resources

  • Classroom Training

    • Federal Student Aid Conferences

      • Past conference presentations at “Conferences” link from IFAP

    • Fundamentals of Title IV Administration

    • Financial Aid Basics

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Training Resources

  • Written Materials

    • Direct Loan School Guide

      • From IFAP, “Direct Loan Materials”

    • COD Technical Reference

      • From Software and Manuals site


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Getting Started in Direct Lending

  • Certified eligible for Direct Loan?

    • Eligibility and Certification Approval Report (ECAR)

    • “E-APP for Schools” Web site

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Getting Started in Direct Lending

  • Contact School Relations Center via email

  • Include required information

    • See instructions at COD online site


      • Select “Click here if you are looking for more information…”

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Getting Started in Direct Lending

Instructions for getting started

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Getting Started in Direct Lending

For additional information on the Direct Loan Program:

[email protected]