Student Financial Aid News

Want some really decent industry perspectives on the Student Aid and Fiscal Responsibility (SAFRA) act? Check out this article from Today’s Campus, which contains a series of interviews about the legislation and what it means. Some interesting quotes about the legislation:

“If you could make one change to those loans today, what would it be? Lower the interest rate on student and parent loans to bring them closer to market rates. They are presently almost double market rates. There is a huge element of unfairness here. I believe that if you ask an informed student to choose between a $200 Pell Grant increase and lower interest rates over the repayment period, he or she would choose lower interest rates. If we want to help students, let’s cut the rates, ease their financial burden, and do it universally.”

If you could make one fact about student loans very clear and widely understood, what would it be? I’d like to de-mystify lender subsidies. The image of greedy lenders taking advantage of poor students needs to be retired. The subsidies to lenders were annihilated in 2007 by CCRAA legislation. The “greedy lender” I work for paid $44 million to Uncle Sam in lender fees and negative subsidies this fiscal year alone. So it’s wrong to claim that eliminating lender subsidies now will finance increased Pell grants. Increased Pell grants will be financed by unusually high student loan interest rates.

What solutions exist for borrowers in default that may be little known? Actually, there are three. Six consecutive student loan payments will restore eligibility for further non-loan student financial aid like Pell grants and Work-Study. After nine satisfactory payments, a defaulted borrower’s bad credit rating can be expunged. And FFEL borrowers can consolidate most defaulted loans into Direct Lending, make satisfactory repayment arrangements, and be removed from ‘default’ in the government’s eyes.

The rest of the article and the interviews are worth your time!

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5 most recent Financial Aid News articles:

• Updated Listing of TEACH Grant Eligible Institutions
• 2010-11 Expected Family Contribution (EFC) Formula Guide
• Graduate Assistance in Areas of National Need (GAANN): Notice Inviting Applications for FY 2010 Awards
• Audio: In a Washington Minute — Senate Seeks Own Mark on Student-Loan Bill (The Chronicle of Higher Education)
• Uncle Sam the Lender (Today’s Campus)