New laws to change student loan process
Written by: Amanda Jordan
All federal student loans must now go through the government rather than private lenders to which the university has become accustomed.
With the passing of the Health Care and Education Reconciliation Act of 2010, students receiving federal Stafford loans and Parent PLUS loans will no longer have the option to borrow through a private lender but must go through the Direct Loan Program of the U.S. Department of Education.
“It will make things less complicated for students,” Director of Financial Services Clint LaRue said. “There’s no obligation to have to choose a lender anymore or to navigate through ‘Who am I supposed to be paying?’”
As a result of the new law, an Income Based Repayment Plan will forgive the balance of loans if the student has not completely repaid it after 25 years or after 10 years if the student is employed in a key public service profession such as teaching, governmental work, social work, law enforcement and work with nonprofit organizations.
“It’s a way the government is trying to say, ‘If you take loans and then you get out of school and your income isn’t sufficient to pay on those loans, then we’re going to give you a break if you’re consistent in making payments,” LaRue said.
However, senior Nicholas Thompson sees problems with the debt forgiveness program.
“It sounds great that the government will forgive the debt after so much time, but my concern is that the government is taking on too much right now – too much debt from the people – and adding even more expenses to a budget that is already saturated with other expenses could cause an astronomical deficit,” Thompson said.
Senior Jerica Briggs, an education major hoping to become a teacher, believes the public service profession loan forgiveness program will help her financially.
“The debt forgiveness for teachers is a huge benefit,” Briggs said. “I intend to pay off my school loans before 10 years have passed, but if unforeseen circumstances arise, it is such a blessing to know I won’t still be paying off those loans when I retire, especially with the salary teachers receive, having to work more than one job to make substantial loan payments.”
Although the government will now be taking over federal loans, students will see little change in the process it takes to apply for federal loans. Students will now sign a new promissory note, which is available on each student’s electronic award, LaRue said.
The Direct Loan program will allow students enrolled in the 2010-11 school year to have the option to consolidate all of their accrued federal loans. Seniors will be given the option to consolidate after graduation through www.studentloans.gov.
“I’ve heard graduates say it is frustrating and difficult to make payments on their loans with the different banks, different rates and different payment dates,” Briggs said. This will make all that simpler and more efficient.”
Freshman Kayla Bilby said the new loan processes removes some of the stresses of financing college.
“The hardest part of going to college is figuring out how you are going to pay for your education,” Bilby said. “Having to deal with just one loan instead of several will simplify the payback process.”
Students can check the current balance and servicers of their federal student loans at www.nslds.gov, and the Student Financial services will soon implement student self-service on myOC, which shows all federal and private loan information in real time.
