Student Financial Aid News

From Inside Higher Ed:

Congress could formally begin its work on President Obama’s proposal to restructure the student loan programs to free up money for Pell Grants and other financial aid as soon as next week, with the House of Representatives scheduled to mark up legislation that (by most accounts) would end all loan originations out of the lender-based Family Federal Education Loan Program but would not call for providing a consistent, permanent source of funding for Pell Grants. With that major development looming, the U.S. Education Department made an announcement Wednesday that could help lay the groundwork for the larger changes. The administration said that four lenders had emerged from a months-long competition to see who would “service” the existing portfolio of federal student loans, but the competition was also seen as a step toward testing the department’s plan (as part of its larger loan proposal) to have lenders compete for “performance-based contracts” to service all federal loans when the FFEL Program vanishes. The four lenders that won the department’s competition were AES/PHEAA, Great Lakes Education Loan Services, Inc., Nelnet, Inc., and Sallie Mae Corporation. The competition was controversial in part because the department limited it to lenders of a certain size, freezing out smaller nonprofit and other lenders.

Commentary

For those that don’t know, the student loan world is kind of odd. You borrow money from a lender, but you pay it back to a servicer. Servicers are paperwork companies – they are responsible for mailing out your bills, collecting payments, and managing your account.

This is fairly big news if you have any federal student loans through the Department of Education’s Direct Loan Program. Check your bill – it will say William D. Ford Direct Loan Program on it if your Stafford loans or PLUS loans are through this program.

If so, one of the four companies listed above will begin servicing the loan at some point in the future. Be sure to keep your contact information, such as mailing address, up to date with the Department of Education so they can reach you and notify you when servicing changes are made. If servicing changes are made, you may need to mail your loan payments to a different company – likely one of the four above.

Scholarship Update

The Robert E. and Sydnor A. Money Scholarship Trust Fund was established in honor of Bob and Sydnor’s thirty-year ministry at First Baptist of Knoxville. This scholarship is for Christians (members and non-members of FBC) whose goal is to enter vocational ministry or who are in vocational ministry and are seeking continuing education.

Despite the notice on the site, the scholarship managers have extended the deadline to July 1.

Details at our free college scholarships search site.

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