Direct Loans | Knowledge Center

SUBJECT: Direct Loans

This assessment provides you with an opportunity to review and evaluate your procedures related to participation in the William D. Ford Federal Direct Loan (Direct Loan) Program.

Participation in the Direct Loan Program also requires knowledge of default prevention and cohort default rate requirements. These areas are covered in the Default Prevention & Management Assessment.

If you identify areas requiring corrective action, we recommend that you complete an Action Plan.

*COVID-19

Due to the current coronavirus national emergency, Congress (through the CARES Act) and the Department of Education (the Department) have made certain exceptions to the normal requirements of the Title IV programs. For more information on any modifications that may impact student eligibility or awarding and disbursing requirements associated with the Direct Loan program, please review the Department’s coronavirus webpage.

The end of the COVID-19 national emergency and public health emergency will cause most COVID-19 waivers to sunset during the 2023-24 award year. For guidance on the sunset of the COVID-19 waivers and flexibilities and other COVID-19 related guidance, please see the following webpages and Electronic Announcements:

Activity Bar:

Direct Loan Activity 1: Direct Loan Reconciliation (Program Year Closeout)

Direct Loan Activity 2: Direct Loan Quality Assurance

Direct Loan Activity 3: Direct Loan Origination

Direct Loan Activity 4: Direct Loan Fiscal Requirements

Additional Links:

2023-2024 FSA Handbook, Volume 8, (digital version); pdf version

2023-2024 FSA Handbook, Volume 4, Chapter 1 (digital version); pdf version

2023-2024 FSA Handbook, Volume 4, Chapter 6 (digital version); pdf version

Direct Loan Operational and Communications Guidance For Schools;

For reference, the table below lists the major sections of the Direct Loan Program regulations in 34 CFR Part 685. The left column shows the titles of the regulatory sections and summarizes the main content of some of the sections. The middle column includes a link to each regulatory section in the Electronic Code of Federal Regulations and any related guidance posted in the Knowledge Center. Where applicable, the associated Direct Loan assessment activity is listed in the third column.

Direct Loan Program Regulations

Section Title	Links	Assessment Activity
The William D. Ford Federal Direct Loan Program 34 CFR 685.100	34 CFR 685.100
Participation in the Direct Loan Program 34 CFR 685.101	34 CFR 685.101
Definitions 34 CFR 685.102	34 CFR 685.102
Borrower eligibility 34 CFR 685.200	34 CFR 685.200
Obtaining a loan 34 CFR 685.201	34 CFR 685.201
Charges for which Direct Loan Program borrowers are responsible 34 CFR 685.202	34 CFR 685.202 See also: May 16, 2023 Electronic Announcement (interest rates) May 15, 2023 Electronic Announcement (effect of sequestration on loan fees)
Loan limits 34 CFR 685.203	34 CFR 685.203
Deferment 34 CFR 685.204	34 CFR 685.204
Forbearance 34 CFR 685.205	34 CFR 685.205
Borrower responsibilities and defenses 34 CFR 685.206	34 CFR 685.206
Obligation to repay 34 CFR 685.207	34 CFR 685.207
Repayment plans 34 CFR 685.208 Eligible repayment plans by loan type Standard, graduated, and extended repayment plans Overview of other repayment plans	34 CFR 685.208
Income-contingent repayment plans 34 CFR 685.209 Pay As You Earn (PAYE) repayment plan Income-Contingent Repayment (ICR) plan Saving on a Valuable Education (SAVE) repayment plan (previously known as the Revised Pay As You Earn (REPAYE) plan)	34 CFR 685.209
Choice of repayment plans 34 CFR 685.210	34 CFR 685.210
Miscellaneous repayment provisions 34 CFR 685.211 Payment application and prepayment Ineligible borrowers Rehabilitation of defaulted loans	34 CFR 685.211
Discharge of a loan obligation 34 CFR 685.212 Death discharge Bankruptcy discharge Overview of other discharge and forgiveness provisions	34 CFR 685.212
Total and permanent disability discharge 34 CFR 685.213	34 CFR 685.213
Closed school discharge 34 CFR 685.214	34 CFR 685.214
Discharge for false certification of student eligibility or unauthorized payment 34 CFR 685.215	34 CFR 685.215
Unpaid refund discharge 34 CFR 685.216	34 CFR 685.216
Teacher loan forgiveness 34 CFR 685.217	34 CFR 685.217
Discharge of student loan indebtedness for survivors of victims of the September 11, 2001, attacks 34 CFR 685.218	34 CFR 685.218
Public Service Loan Forgiveness Program 34 CFR 685.219	34 CFR 685.219 See also: Guidance on limited PSLF waivers
Consolidation 34 CFR 685.220	34 CFR 685.220
Income-based repayment plan 34 CFR 685.221	34 CFR 685.221
Borrower defenses and procedures for loans first disbursed on or after July 1, 2017, and before July 1, 2020, and procedures for loans first disbursed prior to July 1, 2017 34 CFR 685.222 Describes the conditions for loan discharge based on a borrower defense to repayment.	34 CFR 685.222 (see also 34 CFR 685.206)
Agreements between an eligible school and the Secretary for participation in the Direct Loan Program 34 CFR 685.300	34 CFR 685.300 Monthly reconciliation requirement: 34 CFR 685.300(b)(5) Quality assurance system: 34 CFR 685.300(b)(9	Direct Loan Activity 1: Direct Loan Reconciliation (Program Year Closeout) Direct Loan Monthly Reconciliation Worksheet Direct Loan Activity 2: Direct Loan Quality Assurance Component
Origination of a loan 34 CFR 685.301	34 CFR 685.301	Direct Loan Activity 3: Direct Loan Origination
Processing loan proceeds 34 CFR 685.303	34 CFR 685.303
Counseling borrowers 34 CFR 685.304	34 CFR 685.304 See also: Attachment to February, 2015 Electronic Announcement (PLUS counseling) Attachment to June, 2012 Electronic Announcement (financial aid awareness counseling) March 8, 2021 Electronic Announcement (annual student loan acknowledgement)	A Guide To Creating A Policies & Procedures Manual, Section 8.2, Counseling Borrowers Student Loan Counseling on StudentAid.gov Entrance Counseling Exit Counseling Annual Student Loan Acknowledgement
Determining the date of a student's withdrawal 34 CFR 685.305	34 CFR 685.305
Payment of a refund or return of Title IV, HEA program funds to the Secretary 34 CFR 685.306	34 CFR 685.306
Withdrawal procedure for schools participating in the Direct Loan Program 34 CFR 685.307	34 CFR 685.307
Remedial actions 34 CFR 685.308	34 CFR 685.308
Administrative and fiscal control and fund accounting requirements for schools participating in the Direct Loan Program 34 CFR 685.309	34 CFR 685.309	Direct Loan Activity 4: Direct Loan Fiscal Requirements A Guide To Creating A Policies & Procedures Manual, Section 7.4, Administrative and Fiscal Control

Last Modified: 1/4/2024