Federal Direct Student Loan Program
| Student loans in the U.S. |
| Regulatory framework |
|---|
| Higher Education Act of 1965 U.S. Dept. of Education FAFSA · Cost of attendance |
| Distribution channels |
| Federal Direct Student Loan Program Federal Family Education Loan Program |
| Loan products |
| Perkins · Stafford PLUS · Consolidation Loans |
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This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. (April 2008) |
The William D. Ford Federal Direct Loan Program (also called FDLP, FDSLP, and Direct Loan Program) provides "low-interest loans for students and parents to help pay for the cost of a student's education after high school. The lender is the U.S. Department of Education ... rather than a bank or other financial institution." [1]
Following the passage of the Health Education Reconciliation Act of 2010, the Federal Direct Loan Program is the sole government-backed loan program in the United States.
Contents |
[edit] Political history of the program
Congress passed a version of the Direct Loan program under President George H. W. Bush, but Bush promised to veto it.[citation needed] Candidate Bill Clinton promised that he would sign such legislation into law if elected, and the Direct Loan program was one of the first laws he signed in 1993.
Funding for the Federal Direct Student Loan Program has decreased from just over $7 billion in 2006 to $509 million budgeted for 2008.[2]
Democrats have made more student-favorable Direct Loan terms part of their platform. Under Obama's new budget, all new loan originations will be under the Direct Loan program by July 2010, netting $6B in annual savings.[3] The bill approving the measure passed the House of Representatives on September 17, 2009.[4] The switch to 100% Direct Lending effective July 1, 2010 was enacted by the Health Care and Education Reconciliation Act of 2010.
In comparison, other countries have also experimented with government-sponsored loan programs. New Zealand, for instance, now offers 0% interest loans to students who live in New Zealand for 183 or more consecutive days[5] (retroactive for all former students who had government loans), who can repay their loans based on their income after they graduate.[6] This program was a Labour Party promise in the 2005 general election.[citation needed]
[edit] Today
Aggregate student loans in the U.S. are nearing $1 trillion dollars. President Obama has proposed the "Pay as You Earn" plan, which allows students and graduates in debt to pay what they are able according to their income. After 20 years, the balance will be forgiven. President Obama also plans on helping students consolidate their loans into one place, which could drastically improve interest rates.[citation needed]
[edit] References
- ^ "Direct Loan Page for Students.". Student Aid on the Web. 1 July 2009. http://www2.ed.gov/offices/OSFAP/DirectLoan/student.html. Retrieved 11 February 2010.
- ^ Department of Education. Budget of the United States Government: Fiscal Year 2008. http://www.gpoaccess.gov/usbudget/fy08/sheets/28_6.xls
- ^ Organizing for America | BarackObama.com "Obama Calls for Elimination of Subsidies to Student Loan Providers."
- ^ Lewin, Tamar (2009-09-18). "House Passes Bill to Expand College Aid". The New York Times. http://www.nytimes.com/2009/09/18/education/18educ.html. Retrieved 2010-05-02.
- ^ Inland Revenue. "Interest-free student loans - eligibility and what you need to do (About student loans)."
- ^ Inland Revenue. "Student loan repayment threshold (Making repayments)."
