Understanding Direct Lending

The William D. Ford Federal Direct Loan program was established to provide long-term academic loans to qualified students who are enrolled in facilities of higher education, vocational, technical, business and trade schools. The Federal Government provides the funds for direct loans directly to the student, bypassing an outside lender. Schools participating in the Direct Loan program communicate direct loan origination and disbursement data using the Common Origination and Disbursement (COD) process.

The Oracle Financial Aid system supports COD processing for the Direct Loan, Pell and ACG/SMART award programs. Once these award programs are awarded within the system, you run a process that creates distinct COD application records to support the maintenance and processing of COD data.

For each Common Record received and processed by the COD System, the COD System returns a Response document indicating the status of processing, including any rejected data elements and reasons. For Direct Loans, you must create the origination, change, and disbursement record so that the system can properly load and process corresponding inbound acknowledgement records (origination, change and disbursement). There must always be a one to one match between any Direct Loan outbound document and corresponding inbound response document.

Note: The system does not process COD web-initiated response files (document type WB) or the System-Generated PLUS Application Acknowledgment files (document type SP). The COD import process only loads the COD XML data from these document types into the COD staging tables to view and query.

System-Generated Entrance Counseling files (document type EC) are loaded into the COD staging tables. A separate process to evaluate and update the Loan Counseling application table (SFA_LN_CNSL_TBL) with the COD Entrance Counseling data is available.

See Managing Loan Counseling Data.

The three types of direct loans are:

Direct Loan Type	Loan Characteristics
Direct Subsidized Stafford Loan	A student's eligibility for a Direct Subsidized Stafford loan is determined entirely on the student's ability to demonstrate financial need. The U.S. Department of Education subsidizes the interest; therefore, borrowers are not charged interest while they are enrolled in school at least half time, and during grace and deferment periods.
Direct Unsubsidized Stafford Loan	A student is eligible for a Direct Unsubsidized Stafford loan regardless of their financial situation. Borrowers are responsible for paying the interest on these loans.
Direct PLUS Loan and Graduate PLUS Loan	Parents of dependent students may apply for a Direct PLUS loan to help pay for the student's educational expenses. Graduate and Professional students may apply for PLUS Loans for their own expenses. Dependent and Graduate/Professional students must be enrolled at least halftime. Applicant must not have adverse credit history.

The direct lending portion of the Financial Aid package is designed to help you process the Subsidized Stafford, Unsubsidized Stafford, PLUS, and Grad/PLUS loans awarded to students attending your institution.