Government pondering new loan program
By: Jane Lee
Issue date: 11/2/09 Section: News
Secretary of Education Arne Duncan sent a letter to thousands of colleges and universities around the nation in preparation for the government's 2010-2011 school year Direct Loan Program. Congress, however, has yet to give final approval to legislation ending federal subsidies for private student loans for college.
In September, the House of Representatives passed the Student Aid and Fiscal Responsibility Act which would expand the government's direct lending and end the current program of government subsidies and loan guarantees for private lenders, said Joseph Pettibon, the assistant provost to Financial Aid and Scholarships at A&M.
Pettibon said, under the bill, the Direct Loan Program would replace the Federal Family Educational Loan Program. The program would eliminate the role of private banks in federal student lending and allow students to borrow directly from the federal government.
But the Senate has yet to take action on the legislation, and it is uncertain when the transition will occur.
The Federal Family Educational Loan Program has existed for almost 40 years, and the loans come from private banks and lenders.
The Direct Loan Program has been in effect since 1993 and extends loans directly from the federal government, Pettibon said.
"Texas A&M University has been preparing for the change if it occurs," Pettibon said.
The University has changed its student information system from the Student Information Management System to COMPASS, known to A&M students as the Howdy Portal.
COMPASS allows the University to work with both the Federal Family Educational Loan Program and the Direct Loan Program unlike the older system, SIMS, which could only manage the FFELP, Pettibon said.
Texas A&M University has never worked with the Direct Loan Program, but will be letting students know with ample time how the changes will affect their financial aid.
"One of the biggest changes for students would be that they would have to sign a promissory note stating that they understand the changes and where their money is actually coming from," Pettibon said.
In September, the House of Representatives passed the Student Aid and Fiscal Responsibility Act which would expand the government's direct lending and end the current program of government subsidies and loan guarantees for private lenders, said Joseph Pettibon, the assistant provost to Financial Aid and Scholarships at A&M.
Pettibon said, under the bill, the Direct Loan Program would replace the Federal Family Educational Loan Program. The program would eliminate the role of private banks in federal student lending and allow students to borrow directly from the federal government.
But the Senate has yet to take action on the legislation, and it is uncertain when the transition will occur.
The Federal Family Educational Loan Program has existed for almost 40 years, and the loans come from private banks and lenders.
The Direct Loan Program has been in effect since 1993 and extends loans directly from the federal government, Pettibon said.
"Texas A&M University has been preparing for the change if it occurs," Pettibon said.
The University has changed its student information system from the Student Information Management System to COMPASS, known to A&M students as the Howdy Portal.
COMPASS allows the University to work with both the Federal Family Educational Loan Program and the Direct Loan Program unlike the older system, SIMS, which could only manage the FFELP, Pettibon said.
Texas A&M University has never worked with the Direct Loan Program, but will be letting students know with ample time how the changes will affect their financial aid.
"One of the biggest changes for students would be that they would have to sign a promissory note stating that they understand the changes and where their money is actually coming from," Pettibon said.
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