Penn State Direct Loan Program has successful summer start

July 10, 2008

University Park, Pa. (July 10) – Penn State’s first foray into the direct loan business is off to a healthy start. To date, about 3,000 students or parents have taken advantage of the University’s new Direct Loan program to help pay their summer tuition bills. The first round of disbursements totaled just under $5 million with anticipated total disbursements to reach $7.5 million for summer session, according to the University’s Office of Student Aid. 

In March, Penn State made public its decision to participate in the Federal Direct Loan Program in response to the ongoing volatility of the nation’s credit markets. In the Direct Loan program, students and parents of dependent undergraduate students borrow their federal loans—Stafford, Graduate PLUS, and Parent PLUS—directly from the federal government rather than from banks or lenders.

“We, along with many other institutions around the country, were concerned and made changes to guarantee the ability of students and parents to borrow federal loans,” said Anna M. Griswold, executive director of student aid and assistant vice president for undergraduate education. “At Penn State, more than 90 percent of our borrowers lost their federal loan lenders since spring, after many banks and private lenders left the student loan business. We knew we had to do something to guarantee the stability of federal loan funds for our students and parents.”

Last year, more than 44,000 Penn State students (and some parents) borrowed $376 million through federal loan programs. Because the University has one of the largest federal student loan volumes in the country, implementing the Direct Loan program in such a short timeframe was a significant undertaking.

A Direct Loan implementation team was appointed to make sure the program was in place beginning with the summer enrollment period. For months, the implementation team, comprised of staff from the Office of Student Aid, the Office of the Bursar and Administrative Information Systems worked to develop new systems between the U.S. Department of Education and Penn State to transmit and receive federal student loans.

The team, under an extremely short time line, was able to successfully set-up a gateway to transmit and receive data electronically with the U.S. Department of Education and also created new processes among University offices to ensure students and parents would continue to have access to their federal loan funds to help pay their educational expenses.

“Having disbursed our first Direct Loans for summer is a great success. The implementation team will continue its work during the rest of summer in preparation for the next disbursement of loans, which happens on or around the first day of classes this fall semester,” said Griswold. “Now that our participation in the Direct Loan Program will offer a secure source of federal loan funding for our students and parents, we will continue to assist students and families through this new process and remind them of the steps they need to take to secure federal loans for their next semester.”

 

(Media Contacts)

Last Updated March 19, 2009