Federal Student Aid - IFAP
Direct Loans:
A True Public/Private Partnership

A true public/private partnership...
The private sector plays a major role in the Direct Loan program and is
responsible for the core administrative tasks associated with servicing and
collecting an estimated $12 billion portfolio at the end of the 1995-96 year.
The Department of Education's private-sector partners are internationally
known for their expertise:

Electronic Data Systems (EDS) --prime contractor
Computer Technology Services, Inc.
Price-Waterhouse LLP

Computer Data Systems, Inc. (CDSI) --prime contractor
AFSA Services (Division of Fleet Bank)
Anderson Consulting
Digital Equipment
Deloitte and Touche Corporation

National Computer Systems (NCS) --prime contractor

Market-driven incentives...
Direct lending focuses funds on improving services to students and institutions
by employing market-based competition to introduce accountability and
responsiveness to the student loan program. Contracts are awarded on a
competitive, best-price-to-value basis, with customer service structured into
each contract.

Market-based structure...
Simplicity and streamlining are achieved through the Direct Loan program by
reducing the number of players in the student loan process--currently more
than 7,000 banks, 90 secondary markets and 41 guaranty agencies are
involved--and by establishing a direct, accountable relationship between the
Department of Education and the contractor.

Market-recognized benefits...
The Department of Education's private sector partners earn taxable revenues
that will help reduce the federal deficit. Over the next six years, the private
sector will hire additional tax-paying workers in states like Alabama,
California, Maryland, New York, Texas and Virginia. As additional loan
servicers are used, additional employment will accrue to the private sector.