Why do more than 80% of America’s colleges and universities work with the Federal Family Education Loan Program (FFELP) over the government-run Direct Loan Program?

The answer is simple:  Choice and Lower-Cost Loans.

In the FFEL Program, students and families have the freedom to choose the lender that suits them best.  The Direct Loan Program offers students only one lender – the U.S. Government.

Competitive private loan providers offer critical resources to students that the government program simply can’t match:

• Unparalleled customer service, like 24/7 access to financial aid experts;
• Financial literacy education which has significantly decreased default rates among students;
• Lower fees, lower interest rates and additional discounts not offered by the government.

By contrast, the government-run Direct Loan Program offers students and families a single website and a single phone number operated by a single government contractor.  At peak times, that phone number can’t even handle the relatively low number of calls it receives.

Now some politicians in Washington want to weaken the FFEL Program and force schools to choose the inferior government-run program.

America’s students and families simply can’t afford that choice.

But Taxpayers Will Benefit, Right?

Some politicians want you to believe that promoting the Direct Loan Program will save taxpayer dollars.  WRONG.

The less efficient Direct Loan Program costs taxpayers more per loan dollar than the competitive FFEL Program.

The Department of Education has estimated that, as of 2006, the Direct Loan Program owes the government $105 billion but has only $89 billion in performing loans with which to repay.  That translates to a $16 billion shortfall in the Direct Loan Program – a cost which will be borne by taxpayers.

Colleges and Universities Across the Country Speak Out in Favor of FFELP:

“I am convinced by both my personal experience with the FFELP and Direct Loan programs and my professional experience that FFELP is better.  It’s better for taxpayers.  It’s better for borrowers.  It’s better for schools."  -  Elizabeth A. Casale, Financial Aid Director, Carnegie Mellon University

“I believe that aid professionals are able to offer better services and guidance through the FFELP community.”  -  Karen M. Flynn, Director of Financial Aid, University of New Haven

“Through private enterprise, the ability to apply for and receive federal loan funds has been made easier than at any other time in history.”  -  Kenn Posey, Director of Student Aid and Scholarships, Louisiana State University at Alexandria

“I have worked with both FFELP and Direct loan programs and feel that the FFELP services to students and schools far exceed those that can currently be provided by the Department of Education.”  -  Toni Bryant, Financial Aid Administrator, Schreiner University