Northeastern University Announces Switch to Federal Direct Lending Program to Provide Students with Stable and Flexible Funding Source

Business Wire, March 17, 2008

Senator Kennedy Holds Field Hearing at Northeastern on Challenges of College Affordability

BOSTON -- Northeastern University today announced that, beginning with the 2008-09 academic year, it will participate in the William D. Ford Federal Direct Loan Program, which receives funding directly from the Department of Education. Northeastern's participation in the Direct Lending program will ensure that Northeastern students and families will continue to have access to federal low-cost educational loans. It will also mitigate the potential impact of the current credit issues affecting third party private providers of federal educational loans.

The announcement coincides with a Senate field hearing that Senator Edward M. Kennedy, Chairman of the U.S. Senate's Committee on Health, Education, Labor and Pensions, is hosting at Northeastern that will discuss how to ensure access to college in a turbulent economy.

"We need to be certain we're doing everything we can to give students the strongest possible options for college loans, especially in today's troubled economy," said Senator Kennedy. "The ability of young Americans to pay the high cost of college should not be determined by the quarterly earnings of the banks. Today's move by Northeastern will help protect students, as the Direct Loan Program is insulated from disruptions in the private credit markets. The Secretary of Education must take all necessary steps to ensure the programs that exist to shield students from volatile private markets - like the Direct Loan Program - are ready in case they need to take up the slack. We must be prepared to act to ensure students continue to have access to the assistance they need to afford a college degree."

"Northeastern students will continue to achieve their educational goals due to Senator Kennedy's outstanding leadership in providing Direct Lending as a resource for financing their education," said Northeastern President Joseph Aoun.

As many private lenders are reassessing their loan terms and overall participation in the educational marketplace, which could result in higher costs and longer processing times for loan decisions, Northeastern has determined that it is in the best interest of its students and parents that it participate in the Federal Direct Loan Program. With this move, students at Northeastern will not have to negotiate through the potentially confusing and overwhelming process of deciding among over 3,000 lenders to seek the reliable funding they need to pursue their studies.

"It is our responsibility to ensure that every student and parent has a sure and clear path to obtain educational loans, particularly at this important time of year when students are making decisions on college options" said Philomena Mantella, Senior Vice President, Enrollment and Student Life.

The Federal Direct Loan Program funding comes from a single source, the Department of Education, and the loans can not be sold to other financial institutions, thus ensuring that promised benefits are not lost. The Federal Direct Loan Program offers several repayment methods and allows borrowers to switch repayment methods if needed.

"We understand the financial challenges students and their families face and are confident that our participation in the Direct Loan Program will provide further stability and security for our students and their families as they seek federal student loans as a part of their financing plans," added Mantella.

About Northeastern

Founded in 1898, Northeastern University is a private research university located in the heart of Boston. Northeastern is a leader in interdisciplinary research, urban engagement, and the integration of classroom learning with real-world experience. The university's distinctive cooperative education program, where students alternate semesters of full-time study with semesters of paid work in fields relevant to their professional interests and major, is one of the largest and most innovative in the world. The University offers a comprehensive range of undergraduate and graduate programs leading to degrees through the doctorate in six undergraduate colleges, eight graduate schools, and two part-time divisions. For more information, please visit www.northeastern.edu.