<p>What are the benefits of direct lending that is being proposed by the new administration? Just curious.. Read something about ending all FFELP lending and that some lenders are placing bids to participate..</p>
<p>Direct lending means the loans come directly from the government, rather than from private lenders who receive subsidies from the government. Schools choose to participate in either Direct or FFELP lending.</p>
<p>As for the benefits, it depends on your point of view.</p>
<p>Orientation fee should be lower…I think they will rebate 1% of 1 1/2% fee to net 1/2%.</p>
<p>They might reduce your interest rate for timely payments.</p>
<p>They might not go out of business.</p>
<p>I understand the concept of direct lending… I was more curious about FFELP being eliminated. I’ve talked to several people who have dealt primarily with FFELP lending and maybe from a financial aid advisor’s stand point, direct lending is an alien process. . hmm.</p>
<p>I have 2 kids with subsidized Stafford loans. One goes to a school that is a direct lender so her loan is through them. They did charge the 2% origination fees so she actually received the loan amount less the 2% origination fees. As far as I know there are no benefits such as interest rate reductions for on time payments etc. The other goes to a school that is not a direct lender so his loan is through a bank. They did not charge any origination fees so he got the full loan amount. I think they may offer some sort of interest rate reduction for on time payments, but can’t remember. </p>
<p>Personally, if I had the choice of no origination fees up front I would consider that the better deal.</p>