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Direct Lending FAQ’s

Beginning in Summer 2010, Bellarmine University will begin to participate in the William D. Ford Direct Loan program. Student and parent borrowers will receive funding for their federal student loans directly from the U.S. Department of Education rather than from private banks and other lending institutions. Below is a list of questions related to the Direct Loan Program that should help students and families understand how this program works.

Q. What are Direct Loans?
A. Direct Loans are federally insured low-interest education loans for students and parents. These include the Direct Subsidized Loan, the Direct Unsubsidized Loan, the Direct Parent Loan for Undergraduate Students (PLUS) and the Direct Graduate PLUS Loan program for graduate and professional students.

Q. Why is Bellarmine changing to the Direct Loan Program?
A. The Health Care and Education Reconciliation Act of 2010 passed in late March. Due to this recent legislation enacted by Congress, all new subsidized and unsubsidized Stafford Loans made to students, PLUS loans made to parents and to graduate/professional students, and consolidation loans made to borrowers, can only be made under the William D. Ford Federal Direct Loan Program.

Q. What action is required on my part?
A. The application process for Direct Loans is the same as previous years. Students must complete the Free Application for Federal Student Aid. The Office of Financial Aid will process your application and send you notification when your financial aid is ready to review and accept.

Q. Do I have to complete another Master Promissory Note?
A. Yes, all students, including current students, who plan to borrow Federal Direct Stafford Loans, MUST complete a new Federal Direct Loan Master Promissory Note (MPN). To complete the MPN, you will need to sign in at www.studentloans.gov using your Federal PIN. You may complete your new Direct Loan MPN at any time, even before you’ve received your award notification.

Q. Do I need to complete Entrance Counseling for the Direct Loan Program?
A. No, if you have previously completed entrance loan counseling, you will not be required to complete it for the Direct Loan Program.

Yes, if you are borrowing for the first time at Bellarmine, you will be required to complete entrance counseling. To complete entrance counseling, you will need to sign in at www.studentloans.gov using your Federal PIN.

Q. What should I do if I am a parent and I plan to borrow a PLUS Loan for my student?
A. You will borrow through the Direct Loan program. You will need to fill out a Parent PLUS Loan Request Form. Additional information can be found on Step 4 of the student award letter.

Q. What should I do if I am a graduate or professional student and plan to borrow a Graduate PLUS Loan?
A. You will borrow your Graduate PLUS Loan through the Direct Loan program. You will need to fill out a Graduate PLUS Loan Request Form. Additional information can be found on Step 4 of the student award letter.

Q. What are the interest rates and fees for Direct Loans?
A. See the following chart for interest rate and fees:

Loan Type

Interest Rate for 2009-10 (through 6/30/2010)


Interest Rate for 2010-11 (through 6/30/2011)

Origination Fees using rebate*

Subsidized Stafford Loans for Undergraduate Students

 5.6% 4.5%  0.5%

Subsidized Stafford Loan for Graduate Students

 6.8% 6.8%  0.5%

Unsubsidized Loans
for ALL students

6.8%  6.8% 0.5%

PLUS Loans for Graduate Students and Parents

7.9% 7.9% 2.5%

* Direct Loans offer a .5% rebate on Direct Stafford Loans and a 1.5% rebate on Direct PLUS loans. The rebate is given to the borrower when the loan is disbursed to lower the upfront fees. It is contingent on the borrower making their first 12 payments on time. If the borrower fails to make their first 12 payments on time then the previously rebated amount is added to the principal of the loan.

Q. Will I still be able to borrow private loans through an outside lender?
A. Yes, if you meet the qualifications you will still be able to borrow private loans through an outside lender. Information on alternative loan lenders can be found at www.bellarmine.edu/financialaid.

Q. What will happen to the existing loans that I have borrowed with other lenders?
A. 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. You may track your federal loans on the National Student Loan database at www.nslds.ed.gov. You will need your PIN to access this site.

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. However, there are situations in which consolidation won’t be the best repayment alternative. We encourage you to contact your prior lender for more information about repayment before you consolidate. Please visit the Department of Education’s site at www.loanconsolidation.ed.gov for more information.

Q. Will other student aid programs such as federal and state grants be affected by what is happening with student loans?
A. No, those programs are not affected.

Office of Financial Aid
If you need more information, please contact our office at 502.272.7300, or email us at finaid@bellarmine.edu.

Bellarmine University | 2001 Newburg Rd, Louisville KY, 40205 | 502.272.8131 | 800.274.4723

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