Federal Direct history

1992-93: Change in the cap on the PLUS Loan from 12.0% to 10.0% and a 15 basis point reduction in the interest rate.

The Student Loan Reform Act of 1993 significantly changed the student loan landscape by creating a new Federal Direct Loan Program.17 In the Direct Loan Program, the government through the Department of Education (the Department) directly originates student loans.

1994-95: Change in the cap on the Stafford Loan from 9.0% to 8.25% and the cap on the PLUS Loan from 10.0% to 9.0%.

1995-96: Separate rates established during the in-school and grace periods on the Stafford Loan, with these rates 60 basis points lower than repayment rates.

Instead, in the 1997 Omnibus Consolidated Appropriations Act, they prohibited the Department of Education from encouraging or requiring colleges to switch to the direct loan program.

1998-99: 80 basis point reduction in both in-school/grace and repayment rates on the Stafford Loan.

In 2003, a team of investigative reporters at United States News and World Report looked into what was causing some colleges to switch back to the guarantee program.

11.2.6 The Role of Programs Guaranteed or Insured by a Nonprofit or Government Entity in Cases Decided Under the Pre-2005 Version of Section 523(a)(8)

2006-07: Replacement of separate variable in-school/grace and repayment rates on the Stafford Loan with a single fixed rate of 6.8%. Replacement of variable interest rates on the PLUS Loan with a fixed rate of 8.5% (FFELP) and 7.9% (DL).

Beginning in 2007, many student lenders decided to leave the student loan business.

Found., Rethinking the Middleman (July 2009).

A more dramatic change occurred in 2010 when the FFEL Program was eliminated as part of the Health Care and Education Reconciliation Act of 2010.18 As of this date, nearly all federal lending is through the Direct Loan Program.