Student loans get makeover with White House plan
MARK SMITH
Senior Writer
seniorwriter@occc.edu
A weakened economy that has prompted some lenders to drop out of the student loan market has resulted in the U.S. Senate considering a bill that would change some of the loan programs frequently used by students, said Financial Aid Client Services Specialist Linette McMurtrey.
An unstable economy and unreliable student loans market prompted Congress to pass the Ensuring Continued Access to Student Loans Act (ECASLA) on April 30, 2008. The bill allowed the Department of Education to purchase student loans from lenders.
The theory was the purchases would relieve the pressure on the lenders. However, lenders were still dropping out of the market, according to reports from the U.S. Department of Education.
As a result, President Barack Obama’s administration is supporting a bill called the Student Aid and Fiscal Responsibility Act (SAFRA) which would ensure students can still receive loans to help fund their education through direct government lending.
Some of the benefits students could enjoy if the proposed bill is passed are: possible interest rate reductions, doing away with guarantee fees, better repayment plans, and payments based on the student’s income, McMurtrey said.
Although the current loan program — the Federal Family Education Loan Program — offers some of these benefits, according to statistics provided by McMurtrey, only 1 percent of borrowers meet the requirements for interest reduction under the current plan. Under SAFRA, that number would increase.
In addition, students would only have to conduct business with one lender under this proposed system rather than having to sign a new promissory note each time a new lender must be used as with the current program, McMurtrey said.
SAFRA has passed the U.S. House of Representatives and is being considered by the U.S. Senate. In the meantime, ECASLA still offers much-needed benefits to students, McMurtrey said.
For instance, students who meet enrollment and financial need requirements could receive a second Pell Grant for the summer semester.
McMurtrey said OCCC’s Financial Aid office is ready to implement the changes if SAFRA is approved.
“We have attended (training) conferences and we are constantly researching the status of the bill,” she said.
For a transcript of SAFRA and more information, visit www.occc.edu/pioneer. For information about financial aid, contact McMurtrey at 405-682-1611, ext. 7781.
