UpDate - Vol. 14, No. 16, Page 10
January 5, 1995
UD selected for new Direct Student Loan Program

     The University has been selected to participate in the new
Federal Direct Student Loan Program beginning in the 1995-96 academic
year, making it one of the first schools to participate in the new
streamlined system to restructure the nation's student loan programs.
     Schools were selected to participate on the basis of such
criteria as a low default rate, technological capability and
demonstrated administrative and financial responsibility.
     Under the new program, the federal government provides loans
directly to students through schools rather than through private
lenders. By eliminating some agencies-such as guaranty agencies,
secondary markets, banks and others-direct lending eliminates excess
profits, while reducing administrative burdens and increasing
efficiency to make borrowing easier for students, Riley said.
     The new program will benefit students by eliminating paper checks
that need endorsement, Johnie Burton, director of financial aid at UD,
said, because these funds will be transferred electronically into
student accounts.
     "With this program, the length of processing time for loans is
shortened a great deal, and students receive their money faster,"
Burton said.
     The University also benefits by receiving funds faster, he said,
and, if a student needs to make a change in the amount of his or her
loan, it can now be done in a matter of days, instead of weeks.
     Students can qualify for the same amounts of money under the new
program as they did under the old system, Burton said. Students new to
the University will automatically be enrolled in the new system, and
students who are already enrolled and have a loan history under the
present system will be strongly encouraged to switch, Burton said.
"There are such great advantages to students who participate in Direct
Lending that we expect nearly everyone will choose to switch," he
said.
     Approximately half of the full-time undergraduates at the
University receive some form of financial aid, and approximately 6,000
students will be affected by this new program.
     Persons wishing more information about direct lending may contact
the University's financial aid office at 831-8761.
                                                          -Beth Thomas