Why did Penn State enter the Direct Loan Program?
A. Federal Direct Lending provides the most stable source of loan funding available because the funds are provided by the U.S. Treasury. The instability of the debt markets and uncertainty strongly influenced our decision to find the most secure solution possible. This same instability and uncertainty in the markets is what led to PHEAA’s decision to suspend its function as a lender. While there are many private lenders still in the Federal Family Education Loan Program (FFELP), we were concerned about future developments that could negatively impact students. Since approximately 40,800 Penn State students receive their FFELP loans through PHEAA, those students will now need to select a new lender and sign a new promissory note. By entering the Direct Loan Program at Penn State, students will not have to shop around for a lender or worry that the lender they chose may not still be in the program in future years. The Direct Loan Program provides certainty that access to student loans wi