There are also two loan programs in the US, or at least there used to be if this passes, the Direct Loan program from Uncle Sam, and the Federal Family Education Loan Program (FFELP) that gets it's money from private banks. The two programs have identical loan terms. Everything is mirrored.
What they are trying to do is do away with FFELP loans and only have Direct Loans.
As far as having to fill out a FAFSA before being allowed to borrow through a student loan program, there are reasons for that. There are limits on how much students can borrow. This is to combat the ever rising levels of indebtedness that students are experiencing upon graduation. It also guarantees that students don't borrow above and beyond their cost of attendance. Going to school isn't supposed to be a financial free for all where students and parents get to borrow to their heart's content. If that is your goal, there are always alternative student loans through Wells Fargo that have more draconian loan terms than the federal student loan programs.
THe application also verifies if you are eligible for grants (Pell, etc.).