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Direct Loans
What is the difference between a FFELP and the Federal Direct Loan Program?
In the Direct Loan Program, the US Department of Education acts as a lender, providing funds for Stafford loans and PLUS loans. With FFELP, students chose a bank or lender; the college then certified that students and parents were eligible for the loans and applied the loan proceeds to student accounts.
Why is USA changing to the Direct Loan Program?

USA very carefully weighed the differences between FFELP and the Direct Loan Program.  We decided to go with the Direct Loan Program because:

  • As of March 2010, it has been mandated by the federal government.
  • It is a simpler process for families as every borrower uses the same application process and is subject to the same loan fees.
  • It better guarantees the availability of funds for families.
If I’d previously received a Stafford Loan or PLUS Loan through a private lender, do I have to change to the Direct Loan Program?
Yes, all students needing a PLUS or Stafford Loan for the 10-11 school year will need to apply for the loan through the Direct Loan Program. .
What steps do I need to take to apply for a Stafford or PLUS Loan?
  • Apply for financial aid if you have not done so already by filing the FAFSA at http://www.fafsa.ed.gov
  • Complete the Direct Loan master Promissory Note (MPN) on the Direct Loan website: http://www.dlenote.ed.gov.
  • Follow your application processing via PAWS at https://paws.usouthal.edu and check your school jaguar1 email account regularly once you have one assigned.
  • Complete Direct Loan Entrance Counseling (for first time Stafford Loan borrowers only- if you had a student loan during 09-10 or before at USA, you do not need to complete this step).
Are other colleges and universities making the change to the Direct Loan Program?
Yes, other Alabama schools have made this same change in the past years.
What will happen to the existing loans that I have borrowed from other lenders?
You have a choice.  You may either 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 simple payment.  You may either consolidate all your loans with your previous lender or with the Department of Education.  However, many private lenders have discontinued their consolidation services.
Will the change in loan programs cause my prior loans to go into repayment?
No, your prior Stafford Loans will not go into repayment as long as you remain enrolled at least half-time.
How do I contact the Direct Loan Program?
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Date last changed: December 14, 2012 3:18 PM
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