Student Financial Aid News

From NASFAA and Reuters:

“The sponsor of a bill in the U.S. Congress to reshape the $92-billion student loan market told Reuters on Tuesday it will come to a vote soon and he disputed claims that its federal budget savings are overblown,” Reuters reports. “Representative George Miller, the Democratic chairman of the House of Representatives Education and Labor Committee, accused Republican critics contesting earlier budget savings estimates of ‘yet another predictable political gimmick.’ In an exclusive interview, Miller said ‘We are getting ready to take (the bill) to the floor of the Congress, probably right after the August break.’ ‘This is a real opportunity for us, in the aftermath of the crash of the credit markets, to redesign the student loan program so we can save almost $90 billion, and at the same time plow those savings back into benefits for students,’ he said.”

Commentary

Rep. Miller is kidding himself if he thinks the bill will reap anywhere near the $90 billion quoted savings.

Also from NASFAA:

“Lyn Wheeler, director of financial aid for the university in San Angelo, Texas, said her office is doing its best to prepare for a possible switch to the Federal Direct Loan Program, which allows the Education Department to provide loans,” Kansas City infoZine reports. “Wheeler said the switch would put a cumbersome administrative burden on her staff of 11, which deals with an enrollment of 6,155 students. … Wheeler said the university would rather continue to partner with private lenders because students can select a lender and receive quality customer service, including guidance on repayment and default prevention counseling.”

Commentary

Here’s a fast and easy example of how the FFEL program provides subsidized benefits to students.

This is the Department of Education’s scholarships guide.

This is the Student Loan Network’s scholarships guide.

The Department’s guide is filled with the same generic, unhelpful, unactionable advice given to every college-bound kid everywhere: go find scholarships. Ask around. See what’s available, and apply for it.

The private sector guide – our guide – in contrast lays out specific, concrete steps, proven methods, and things you can do right away with details and examples. There’s no comparison between the two guides.

When third party companies like the Student Loan Network provide competition for the Department of Education, the end result is that students get more – more access to resources, more help, more service. If Congress truly does end the FFEL lender system, those resources will likely diminish or disappear entirely.

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