{
  "id": "R44845",
  "type": "CRS Report",
  "typeId": "REPORTS",
  "number": "R44845",
  "active": true,
  "source": "EveryCRSReport.com",
  "versions": [
    {
      "source": "EveryCRSReport.com",
      "id": 461206,
      "date": "2017-05-11",
      "retrieved": "2018-05-10T13:29:44.383813",
      "title": "Administration of the William D. Ford Federal Direct Loan Program",
      "summary": "The William D. Ford Federal Direct Loan (Direct Loan) program, authorized under Title IV, Part D of the Higher Education Act of 1965 (HEA), is the primary federal student loan program. It makes available loans to undergraduate and graduate students and the parents of dependent undergraduate students to help them finance postsecondary education expenses. As of the end of FY2016, there was approximately $949.1 billion in outstanding Direct Loan program loans. Direct Loan program administrative expenses totaled approximately $771 million in FY2016. \nUnder the Direct Loan program, the federal government essentially serves as the banker by providing loans to students and their families using federal capital and assuming the risk of loss against borrower default. In addition, the federal government, via the U.S. Department of Education\u2019s Office of Federal Student Aid (FSA), manages the outstanding loan portfolio and is responsible for the program\u2019s administration. FSA is primarily responsible for developing the administrative functions and processes and performing oversight activities for the Direct Loan program to enable its day-to-day operation. Additional parties, including institutions of higher education (IHEs), contracted loan servicers, and contracted private collection agencies (PCAs), perform many of the routine administrative tasks for the program.\nThe first step in administering a Direct Loan is processing a student\u2019s Free Application for Federal Student Aid (FAFSA). After a student has completed his or her FAFSA, FSA\u2019s automated systems process the application and make an initial determination regarding a student\u2019s eligibility for federal student aid. IHEs then receive the processed information and take a variety of steps to award financial aid, including Direct Loans, to the student. Steps taken by the IHE at this point include packaging available aid for the student, originating and disbursing any Direct Loans the student is eligible for and has accepted, and managing Direct Loan program funds available to the institution.\nAfter a borrower\u2019s Direct Loan is disbursed, the loan is then assigned to one of multiple loan servicers with which FSA has contracted. Functions performed by loan servicers vary depending on the loan\u2019s status (e.g., repayment, grace period) and individual borrower circumstances; however, there are several tasks loan servicers typically perform. These include providing information to borrowers on loan terms and conditions, collecting and applying loan payments to outstanding balances, processing requests for loan deferment or forbearance, processing applications to consolidate federal student loans into a Direct Consolidation Loan, and providing delinquency and default prevention activities. \nIf a borrower defaults after entering repayment on a Direct Loan, then a variety of actions may be taken to attempt to reinstate the loan into good standing and recover payment on it. Loan servicers provide initial outreach to defaulted borrowers and attempt to enter into repayment or rehabilitation agreements with them. If the loan servicer is unsuccessful, a borrower\u2019s defaulted loan is transferred to FSA and then may also be transferred to one of multiple PCAs with which FSA has contracted. FSA and PCAs will attempt to enter into voluntary repayment agreements with borrowers; however, a variety of other debt collection tools may also be used if these attempts are unsuccessful. For instance, a borrower may be determined eligible for administrative wage garnishment or income tax offset. If a borrower successfully brings his or her loan into good standing, the account is transferred back to a loan servicer, which will continue to service it.",
      "type": "CRS Report",
      "typeId": "REPORTS",
      "active": true,
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          "encoding": "utf-8",
          "url": "http://www.crs.gov/Reports/R44845",
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      ],
      "topics": []
    }
  ],
  "topics": [
    "Domestic Social Policy"
  ]
}