2008 Woodie Awards
Feds ease student loan process
Financial crisis sparks change
Dinah Gorelik, Collegian Staff
Issue date: 12/2/08 Section: News
Although many students face the difficulty of paying back loans, acquiring loans in the first place is now becoming a pressing issue. As a result, the US Department of Education is getting involved to make loans easier to secure by purchasing Federal Family Education Loan Program Loans (FFELP).
With the recent financial crisis in the United States, banks began to restrict lending, and people have found it harder to borrow money. This was especially tough on students, many of whom rely on loans to pay for their education.
Therefore, Education Secretary Margaret Spelling announced on Nov. 8 that the department will purchase loans, including the FFELP loans from 2007 to 2008, to "ensure availability of federal student loans, maintain the public/private partnership in the Federal student loan program, protect taxpayer interests by adding no net costs to the Federal Government, and provide the liquidity and support needed to stabilize the student loan marketplace."
The plans are to accumulate $6.5 billion in loans by buying $500 million worth of loans each week beginning in early December until Feb. 28, 2009.
The department will also buy fully disbursed FFELP Subsidized Stafford, Unsubsidized Stafford, and PLUS loans originated for the 2007-2008 academic year, according to the department's Web site.
"I am not sure where this will end up 20 years from now because student loans have high interest as it is. So going through a middleman will only increase the costs for a student," said University of Massachusetts student Rachael Mroz.
On Nov. 20, Spelling said in a statement, "I remain committed to making sure students and their families continue to have access to Federal loans for this school year and beyond."
These words may reassure those who think the department will not have the money to buy loans if the financial crisis continues.
"Today I am using the authority granted by Congress to protect students and their families during the unprecedented current market conditions and taking necessary steps to help ensure continued, successful disbursements of student loans," Spelling said.
With the recent financial crisis in the United States, banks began to restrict lending, and people have found it harder to borrow money. This was especially tough on students, many of whom rely on loans to pay for their education.
Therefore, Education Secretary Margaret Spelling announced on Nov. 8 that the department will purchase loans, including the FFELP loans from 2007 to 2008, to "ensure availability of federal student loans, maintain the public/private partnership in the Federal student loan program, protect taxpayer interests by adding no net costs to the Federal Government, and provide the liquidity and support needed to stabilize the student loan marketplace."
The plans are to accumulate $6.5 billion in loans by buying $500 million worth of loans each week beginning in early December until Feb. 28, 2009.
The department will also buy fully disbursed FFELP Subsidized Stafford, Unsubsidized Stafford, and PLUS loans originated for the 2007-2008 academic year, according to the department's Web site.
"I am not sure where this will end up 20 years from now because student loans have high interest as it is. So going through a middleman will only increase the costs for a student," said University of Massachusetts student Rachael Mroz.
On Nov. 20, Spelling said in a statement, "I remain committed to making sure students and their families continue to have access to Federal loans for this school year and beyond."
These words may reassure those who think the department will not have the money to buy loans if the financial crisis continues.
"Today I am using the authority granted by Congress to protect students and their families during the unprecedented current market conditions and taking necessary steps to help ensure continued, successful disbursements of student loans," Spelling said.
Viewing Comments 1 - 3 of 4
satria
posted 12/02/08 @ 11:12 AM EST
It is happy to see your posting. Yes really informative article. I will tell this information again to my friend, oh yes I suggest you to check my blog on Student Loan , I hope the article on my blog will be usefull for you. (Continued…)
Mark C Brown
posted 12/03/08 @ 6:08 AM EST
The federal loans have a lot of paperwork associated with them. It is a real hassle to wade through all these papers and documents...
:)
Andy Phelps
posted 12/04/08 @ 3:02 PM EST
Wow. In this day and age, the best thing a student can do is avoid taking out student loans if at all possible. Federal loans aren't a bad choice if there aren't any other options, but students should also try to find free scholarships. (Continued…)
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