Direct Lending at Moraine Park Technical College

Moraine Park Technical College utilizes the William D. Ford Federal Direct Loan Program for (also known as Direct Lending) for Federal Student Loans. You may have questions or concerns about what Direct Lending means for you as a borrower. We have compiled a list of questions and answers that hopefully you will find helpful. More information can be found at studentloans.gov.

What are Direct Loans? How do I know if I qualify for a Direct Loan?

Direct Loans are low-interest loans for students to help pay for the cost of a student's education after high school. Students must complete the FAFSA and submit any required documentation to Moraine Park, who will then verify student Direct Loan eligibility. Direct Loans are a form of financial aid which must be repaid.

What are the benefits of utilizing Direct Loans? Why did Moraine Park switch to the Direct Loan Program in 2010?

  • Loan interest rates are low and fixed. Students do not require a credit history for eligibility.
  •  Federal Direct Lending provides a stable source of student loan funding because the funds are provided by the U.S. Treasury.
  •  The Direct Lending Program is not impacted by changes in the economy.
  •  Direct Lending provides a single point of contact for managing student loans.
  •  Loans are never sold in the Direct Loan Program.
  •  There are a variety of repayment options in the Direct Loan Program.

What is the difference between the Direct Loan Program and the Federal Family Education Loan Program (FFELP)?

The most important difference between Direct Lending and the FFELP program is the source of loan funding. Direct loans are funded through the U.S. Department of Education using funds obtained from the U.S. Treasury. This program offers students and parents one point of contact because the loans are made, backed, and serviced by the U.S. Department of Education. In the FFELP Program, funds come from banks and lenders creating multiple points of contact for students. There are also some differences in interest rate, fees and repayment options which make the Direct Loan Program more beneficial for borrowers.

If I borrowed in the past, will I still be able to continue borrowing through the same lender?

If you borrowed a Federal Direct Stafford loan for the 2010-2011 academic year, you have already borrowed through the Direct Loan Program. However, if you had a loan at Moraine Park before 2010-2011, you will not be able to utilize that same lender. If you are in this situation, you will be required to complete a new Master Promissory Note (MPN) for the Federal Direct Stafford loan.

What will happen to the existing loans that I have borrowed from other lenders?

Any previous loans you borrowed from another lender will be serviced by the lender/servicer you selected when you signed your original MPN. Many loans were sold to the Department of Education so pay close attention to any letters and mailings.

After graduation you have a choice to make individual payments to your previous lender(s) and to the Department of Education for your Direct Loans, or you can consolidate your loans into one payment with the Department of Education. Please visit the Department of Education's website for more information about Loan Consolidation.

Do I have to complete another Master Promissory Note?

If you have not already borrowed utilizing Direct Loan, you must sign a new Direct Loan Master Promissory Note (MPN) because you will be borrowing from a new lender; the Department of Education. If you previously had a Direct Loan, your Master Promissory Note is good for 10 years.

How and when do I complete a Direct Loan Master Promissory Note?

If you are a first time borrower or if you have not previously had a Direct Loan, you will be required to complete the Master Promissory Note online at studentloans.gov.  You will receive this information via a missing information letter after your FAFSA has been downloaded at Moraine Park.

What are the interest rates and fees for Direct Loans for 2013-2014?

Direct Loan Program Interest Fees*
Subsidized Federal Direct Loan 3.86% 1.051%
Unsubsidized Federal Direct Loan 3.86% 1.051%

I have previously completed entrance counseling for past student loans, do I have to complete Direct Loan entrance counseling?

No, you will not be required to complete entrance counseling if you have previously completed it for a similar Federal loan under the FFELP Program. Only new borrowers will be required to complete Entrance Counseling.

Will the Stafford Loans I borrowed through my bank or lender in prior years still be deferred now that Moraine Park is participating in the Direct Loan Program?

As long as you are enrolled in school on at least a half-time basis, your prior year federal loans will continue to be deferred. Enrollment information is reported to lenders by the school on a regular basis.

What are Direct Loan repayment options?

There are seven repayment options available for Direct Loans:

  1. Standard
  2. Extended
  3. Graduated
  4. Income Contingent Repayment
  5. Income-based Repayment
  6. Income-Sensitive Repayment
  7. Pay as you Earn

Please contact your loan servicer if you would like to discuss repayment plan options or change your repayment plan.  You can get information about all of the federal student loans you have received and find the loan servicer for your loans using the National Student Loan Data System (NSLDS) at nslds.ed.gov.

How do I contact the Direct Loan Program?

Federal Student Aid Information Center (FSAIC):  1-800-4-FED-AID (1-800-433-3243)