A new federal act signed by President George W. Bush this month will ensure University students and families access to federal student loans despite the recent turmoil in the U.S. credit markets.
This legislation will help many students across the state and the country fund their college education, said Elizabeth Bickford, director of financial aid at the University, but it will have little to no effect on most University students.
The University is a direct lender, meaning that students here were protected against the recent turmoil in the credit market and have had consistent and continued access to their Federal Stafford Loan.
Bickford explained that students who attend a university that is not a direct lender were finding it increasingly difficult to access their Stafford loan through independent lenders.
Bickford said the federal government first “passed legislation to keep interest rates on student loans down. (Stafford) loans then no longer provided profit margins, so many banks left the program – this left the schools high and dry.”
Bickford said the only impact that the “Ensuring Continued Access to Student Loans Act of 2008” will have on students is that it will increase the unsubsidized federal Stafford loan limit for some dependent students to $2,000 annually.
This increase will only affect students who meet certain financial need criteria, said Bickford. The Office of Financial Aid and Scholarships will be contacting these students during the summer to notify them.
“Unsubsidized federal loans definitely help a lot of our students,” said Bickford. “Some students here will benefit from the act.”
According to the National Association of Student Financial Aid Administrators’ Web site, in addition to increasing the Stafford loan limit for undergraduate students, the law will give parent borrowers the option to defer payment of their federal PLUS parent loan until six months after their children leave school.
The law also gives the U.S. Education Secretary the “temporary authority to purchase loans from lenders in the federal guaranteed loan program,” according to a Committee on Education and Labor U.S. House of Representatives press release. This will ensure that private lenders continue to profit from providing federal loans, further ensuring students and families can access to them.
“With this bill signed into law, students and families now have every assurance that they will continue to have access to all the federal student loans they are eligible for, no matter what happens in the nation’s financial markets,” Rep. George Miller (D-Calif.) chairman of the House of Education and Labor Committee said in a press release.
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