As President Barack Obama prepares to sign legislation Tuesday that will affect student loans, GW’s Office of Student Financial Assistance is making changes to meet the bill’s requirements.
Executive Director of Student Financial Assistance Dan Small told students in an e-mail this weekend that GW will fully comply with the Federal Direct Loan Program starting in the 2010-2011 school year. Students hoping to apply for federal loans for next fall will apply through GW, with the Department of Education serving as the new lender instead of credit institutions like Sallie Mae, Small said.
“Eligibility remains exactly the same, but with an application process that is easier and an electronic transfer of funds that is more timely and efficient,” Small said.
The bill eliminates the Federal Family Education Loan Program, which in the past funded Federal Stafford Loans and PLUS Loans, which are given to parents. Students would go through private lenders to borrow funds, but now the loans will originate directly from the government.
GW had been considering the switch to the direct lending program for months, but with the health care “fixes” bill – the legislation to which the student loan reform is tied – set to be signed Tuesday, the University is already making changes to its Web site to help students make the switch. Last September, Senior Vice President for Student and Academic Support Services Robert Chernak said that GW applied and was approved for the Direct Loan Program.
Because private lenders will no longer receive fees from the government for handling the loans, the government can save $68 billion over 10 years, Obama said in his most recent weekly address.
“Year after year, we’ve seen billions of taxpayer dollars handed out as subsidies to the bankers and middlemen who handle federal student loans, when that money should have gone to advancing the dreams of our students and working families,” Obama said.
In addition, the reform will expand the federal Pell Grant program, cap annual student loan repayments at 10 percent of a college graduate’s income, and increase funding to community colleges and those serving minority students.
Students will be required to sign a new promissory note with the Department of Education, but other paperwork for aid does not change. GW’s financial aid Web site has been updated with details on the application process.
Though participation in the new program will put more loan application materials through GW, Small said in an e-mail that for now, his office anticipates adding one full-time person to transmit the electronic files between the University and the direct loan processing agency.
“To coordinate and reconcile every transmission on a daily bases requires the attention of a full time person. As we become more comfortable with the process we will reevaluate staffing needs,” Small said.
The process is done much faster electronically, he said, but students can still get paper copies of forms through the Department of Education.
“We do not anticipate additional expenses such as loan materials, etc… since the process is truly automated and the Department of Education has created the necessary web sites for students/parents to access to complete all forms and obtain information,” Small said.
Some students, like freshman Doorie Lee, said the direct lending process seemed more streamlined.
“That’s the main reason why I didn’t sign up for loans, because the entire process was a hassle and I didn’t want to deal with a private lender. But now if we go through GW there will probably be less paperwork and the interest rate might be lower because you’re dealing with the federal government,” he said.
Sophomore Caitlan Dowling said she thought getting funds will be easier with the Federal Direct Loan Program.
“I think it’s good. A lot of GW students have so many loans to worry about. This will ease the stress of paying for college.”
Erica Obersi contributed to this report.