Over the last year there has been a great deal of turmoil in the lending community resulting from the recent instability in the national credit markets (initially caused by problems with subprime mortgages). In 2008-09, UC Merced borrowers encountered significant difficulties as lenders drastically reduced the benefits they were offering or dropped out of the Federal loan programs altogether. As a result of these challenges, UC Merced felt compelled to consider more favorable options for our students and their parents.

Fortunately, Federal Stafford Loans are also available to students through the U. S. Department of Education’s Stafford Direct Loan Program (known as Direct Stafford Loans). Beginning fall 2009, UC Merced will begin participating in the Stafford Direct Loan Program and will cease offering Federal Stafford Loans through private lending institutions.

Federal Direct Lending provides the most STABLE source of loan funding available because the funds are provided directly by the U.S. Treasury. The instability of the debt markets, and uncertainty with what will happen next, strongly influenced UC Merced’s decision to find the most secure solution possible for our students.

We believe the long term benefits of a stable fund source along with the ease of communicating with one lender (the Department of Education) will far outweigh the inconveniences that may result from entering into a new loan program. For more information:

FFELP and DL Comparison
Direct Loan FAQs

WHAT THIS MEANS FOR YOU:
---Students planning to borrow a Federal Stafford Loan in 2009-10 will need to sign a new Master Promissory Note (MPN) with the Direct Loan Program. Once you sign the note, you will be able to borrow for your remaining time at UC Merced without having to sign a new note again. Information on where and how to do this will be available in MyFinancialAid when your award notification is ready to view.

---Parents planning to borrow a Parent PLUS Loan in 2009-10 will need to sign a new Master Promissory Note (MPN) with the Direct Parent PLUS Loan Program. Please visit the How to Apply for a Parent PLUS Loan section for step-by-step instructions.

The UC Merced Office of Financial Aid and Scholarships is committed to ensuring that this transition is successful for all students and parents. Please contact us if you have any questions or need assistance with any part of the new process.