Direct Federal Student Loans are Easier

by Lauren
(Chicago)

I think federal Direct student loans are easier for students. They don't have to spend time looking at different lenders and thinking about which one would be the best one. Every year, their routine for getting their money will be the same.


It will probably be easier for the schools, too. They will be certifying loans for one lender, instead of several. They won't have to track down who is holding which loans for any given student. It will be more efficient for them, because all the software will be the same.

Taxpayers will probably have to pay more. If defaults increase, it will cost more than FFELP loans would have, because taxpayers foot the bill for 100% of defaults, instead of 97%. This may not sound like much, but when you talk about thousands of loans, it adds up. The thing is, all the accounting for the costs will be out there for anyone to see. With the FFELP, taxpayers didn't know much about where their money was going. Transparency has to be worth something.

An easier, streamlined system has much less opportunity for corruption. There's no incentive for "pay to play" schemes. In the long run, this switch to Direct federal student loans, will probably save everyone money that they didn't even realize they were losing.