Northeastern announces switch to Federal Direct Loan Program

Beginning with the 2008-2009 academic year, Northeastern will participate in the William D. Ford Federal Direct Loan Program, which receives funding directly from the Department of Education.

Northeastern’s participation in the Direct Loan Program will ensure that Northeastern students and families will continue to have access to federal low-cost educational loans.  It will also mitigate the potential impact of the current credit issues affecting third-party private providers of federal educational loans.

The university’s announcement coincided with a Senate field hearing that Sen. Edward M. Kennedy, chairman of the Senate Committee on Health, Education, Labor and Pensions, hosted at Northeastern to discuss how to ensure access to college in a turbulent economy.

“We need to be certain we’re doing everything we can to give students the strongest possible options for college loans, especially in today’s troubled economy,” said Kennedy.  “The ability of young Americans to pay the high cost of college should not be determined by the quarterly earnings of the banks.  Today’s move by Northeastern will help protect students, as the Direct Loan Program is insulated from disruptions in the private credit markets. 

“The secretary of education must take all necessary steps to ensure the programs that exist to shield students from volatile private markets — like the Direct Loan Program — are ready in case they need to take up the slack.  We must be prepared to act to ensure students continue to have access to the assistance they need to afford a college degree,” he said.”

“Northeastern students will continue to achieve their educational goals due to Senator Kennedy’s outstanding leadership in providing direct lending as a resource for financing their education,” said Northeastern President Joseph Aoun. 

As many private lenders are reassessing their loan terms and overall participation in the educational marketplace, which could result in higher costs and longer processing times for loan decisions, Northeastern has determined that it is in the best interest of its students and parents that it participate in the Direct Loan Program.  With this move, students at Northeastern will not have to negotiate through the potentially confusing and overwhelming process of deciding among more than 3,000 lenders to seek the reliable funding they need to pursue their studies.    

“It is our responsibility to ensure that every student and parent has a sure and clear path to obtain educational loans, particularly at this important time of year when students are making decisions on college options” said Philomena Mantella, senior vice president for enrollment management and student affairs. 

The Direct Loan Program funding comes from a single source, the Department of Education, and the loans can not be sold to other financial institutions, thus ensuring that promised benefits are not lost.  The program offers several repayment methods and allows borrowers to switch repayment methods if needed.

 “We understand the financial challenges students and their families face and are confident that our participation in the Direct Loan Program will provide further stability and security for our students and their families as they seek federal student loans as a part of their financing plans,” added Mantella.