The University said it hopes to make the Stafford and PLUS loans process easier for students… The University said it hopes to make the Stafford and PLUS loans process easier for students and their families.

An e-mail that Pitt’s Office of Admissions and Financial Aid sent late last month informed students that Pitt will switch to a direct loan program for the 2010-11 academic year.

This means that students will get subsidized and unsubsidized Stafford and PLUS loans directly from the U.S. Department of Education, which will now serve as the single point of contact for the loan process, from application to repayment.

Pitt students currently receive those loans through the Federal Family Education Loan Program, in which students obtain the loans from participating private institutions, such as banks or credit unions.

The interest rates on Stafford loans will not change.

But interest rates on PLUS loans will decrease from 8.5 percent with FFELP to 7.9 percent with the direct lending program, formally named the William D. Ford Federal Direct Loan Program.

Students will have to fill out a Direct Loan electronic master promissory note to switch to the new program. A master promissory note is an agreement to repay the borrowed money.

Additionally, students must also complete Direct Loan Counseling.

Students with loans under FFELP already completed these steps for their current loans, but they will have to complete a different master promissory note and entrance counseling to participate in the direct lending program.

The Free Application for Federal Student Aid application doesn’t depend on completing the Direct Loan electronic master promissory note.

Suzanne McColloch, senior associate director for admissions and financial aid at Pitt, encourages students who need money for the fall semester to complete their Direct Loan electronic master promissory note as soon as possible but no later than mid-July.

She said the direct lending program provides a more secure source of funding, especially after the confusion that the banking crisis caused.

Many banks either changed the terms of their loans or dropped out of the FFELP, forcing students to switch lenders.

Direct lending will be “much more straightforward, much more streamlined … and students will know that they have one secure source of funding,” McColloch said.

But the financial crisis didn’t cause Pitt to change the loan processing system.

McColloch said a national movement toward direct lending has started. Pitt administrators considered the change several years ago, she said, but they decided to allow time for the University to adapt to PeopleSoft.

McColloch said some initial confusion for students and families could occur, but the confusion shouldn’t last.

“We feel very confident that we will provide a higher quality of service for our students, and we’re excited about moving forward,” she said.

The Office of Admissions and Financial Aid will continue to keep in contact with students throughout the spring and summer terms through e-mail.

“We will be in fairly constant communication with them about the new process, and we have a large staff that is prepared to help anybody that feels confused by the process,” McColloch said.

Assistant News Editor Estelle Tran contributed to this report.