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Before an institution can begin making loans in the Federal Family Education Loan Program (FFELP) or Federal Direct Loan Program, it must meet the statutory definition of an "eligible school," and agree to perform certain administrative functions. Statutory requirements for institutional eligibility are discussed in Volume 2 - FSA Handbook: School Eligibility and Operations. A school may also act as a lender in the FFELP, provided it uses the bulk of the interest and special allowance payments to make financial aid grants to its students.
The school’s primary responsibility in the loan origination and/or application process is to certify that the student is eligible for the loan amounts requested. The school, not the lender, determines the student’s or parent’s eligibility for a Federal Stafford or PLUS Loan.
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