University Park, Pa. -- Fall registration marked the successful completion of Penn State's implementation of the federal Direct Loan Program. As of Sept. 7, the University disbursed $180 million in federal Direct Loans funds — Stafford, Parent PLUS, and Graduate PLUS — for more than 40,000 undergraduate and graduate students compared to $137.2 million in Federal Family Educational Loan Program (FFELP) funds in 2007. The University is among the top five institutions with the greatest Direct Loan volume in the country.
One of the Direct Loan programs that experienced the most growth at Penn State was the Graduate PLUS Loan. This fall, 22 percent more graduate students have turned to Direct Loans, rather than rely on private loans, to borrow beyond the maximum Stafford Loan limits to help pay their educational costs.
The University joined the federal Direct Loan Program — in which students and parents borrow their federal loans directly from the federal government rather than from banks or lenders — in summer 2008, to ensure students and parents had access to a secure source of federal loan funds despite unstable market conditions. Dozens of banks and private lenders stopped offering federal loans to students in 2008 due to downturns in the credit markets and cuts in government subsidies. "Having a secure source of government-backed educational loans has brought relief to students and families who were worried about the availability of these loans due to the instability of the credit markets," said Anna M. Griswold, executive director of student aid and assistant vice president for Undergraduate Education.
Nine out of 11 Big Ten institutions participate in direct lending. The number of higher education institutions that participate in direct lending continues to grow. According to the Sept. 2 edition of The Chronicle of Higher Education, more than 300 institutions made the switch to direct lending this year alone. Universities such as Penn State, who switched recently to direct lending, created a 43 percent jump in loans originated through the federal Direct Loan Program.