Spring. The time when students rack their brains when trying to figure out what the FAFSA form wants, what tax return forms mean, and how hard they can hit their heads against the wall without bleeding. Once submitted, they wait. They wait for a scrawny letter that for some students will either make or break the future of their enrollment. This year, spring has also brought yet another head bang inducing ingredient into the mix- a new system for student loans. Students, hold your horses. Don’t try to break the safety barriers on the windows in your dorm room quite yet. While the bill itself is confusing, its actual effect on students is minimal. Just breathe, this is going to be ok.
The federal student loan system has involved banks for quite a while. Decades ago, students did actually choose the bank through which their federal loan was organized, but all banks that worked with the program had the same loan terms. Bill Mack, a financial aid advisor from Financial Aid Experts Inc, said, “When students picked the lender from which they wanted to borrow they would decide based on their or their parent’s prior banking history, the location of the bank branch or which bank offered them a free Frisbee.”
Mack also explained how the game changed. First, the government did a little test run of being direct lenders. The program was a hit, which made the William D. Ford Federal Loan Program officially part of all schools’ financial aid programs.
Back in the day of last week, part of a student’s financial aid reward might include a William D. Ford Federal Direct Loan, but it might also include Federal Family Education Loan. Even though students were not necessarily aware of this, such loans were in fact organized by separate banks. The latter has been nixed in the new legislation. Now all loans come straight from the feds.
A number of people don’t appear too concerned about the bill’s affect on students. Karen, an advisor for student loans at Chase Bank, said the bill “Is not going to affect students negatively at all,” but that, “Sometimes federal loans will not cover the students needs, but we will still have our private student loans.” Like today, under the new bill students can still take out non federal, privately funded loans.
Lisa Westermann, the Assistant Vice President of Public Relations at Wells Fargo & Company, a bank that managed FFELP loans, appears to be equally calm about the change. Wells Fargo will also continue their private students loans, “For the most part, government guaranteed loans provide less than $7500 in funding for college costs,” Westermann said, “far below the amount the typical student requires.”
On Capitol Hill, there was some serious divide (gasp!) between democrats and republicans regarding the student loan bill. Some republicans quite vehemently opposed the entire health care bill, and were particularly opposed to the idea of shoving student loans in with it. Antonia Ferrier, Republican Senator Orrin Hatch’s spokeswoman said Hatch was not in favor of the bill because “it was included in a massive 25 trillion dollar government health care take over,” and that, “the democrats did not have enough money so they included the government takeover of the student loan industry to offset the cost of the bill.”
Democrats, on the other hand, were generally in favor of the bill. New Hampshire senator Jeanne Shaheen’s secretary Rebecca Jonnas said the senator’s vote was, “in belief that it would help those middle and lower class students who deserved to further their education, who simply couldn’t afford the cost of loans necessary to do so.” Despite Jonass’s response, the reason why more students would be able to get loans is unclear from a basic understanding of the bill.
What is missing from the senatorial critiques are any vocal concerns about current students with loans. University students, especially those at the good old life-long-debt private college tuition variety, seem to be the last to know about the bill. At the New School University, students who have FFELP loans have not been informed of any changes or actions to be made besides two poster boards in the lobbies of two buildings. At the time of observation, the both posters (which are in fact just giant letters telling students to sign a promissory note) were amongst other posters for events such as “The Green Party Dance on 4-20!”.
According to financial aid expert Mark Kantrowitz, who has plenty to say and plenty of knowledge to share about the bill, reinstated the lack of changes, and lack of additional benefits, for students in this bill, “What this legislation does for current students and current borrowers is pretty much nothing,” he said.
For students already in over their heads with FAFSA forms amidst their finals, the bottom line seems that there is nothing to get up in arms about. No need to jump out a window, no more self destruction, just sign one more promissory note, and you’re done.
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