Student Loan Transition Was Seamless, Bipartisan Witnesses Confirm to Education Panel
WASHINGTON, D.C. – Every witness at the Education and the Workforce’s hearing today regarding the Direct Loan Program (DL) agreed that the transition to the more reliable DL program was seamless and successful. The witnesses, seasoned financial aid professionals from colleges and universities of various sizes, all acknowledged that the transition to Direct Lending left no one without the student aid they needed. When asked, none of these professionals said they wanted to go back to the past under Federal Family Education Loan Program (FFELP).
“The Student Aid and Fiscal Responsibility Act, a tremendous victory for students, families, and taxpayers, made federal college loans more stable and efficient at no cost to taxpayers, reinvested billions of dollars into student financial aid programs such as Pell Grants, and supported President Obama's college access and completion goals,” said U.S. Rep. Ruben Hinojosa (D-TX), the ranking member of the Subcommittee on Higher Education and Workforce Training of the House Committee on Education and the Workforce. “In terms of oversight, while the Department of Education's Office of Inspector General has conducted several reviews of the transition to DL program, I understand that none of these reviews have identified material issues associated with the transition.”
U.S. Rep. Tim Bishop (D-NY), a former financial aid officer and U.S. Rep. Rob Andrew (D-NJ), both polled the panelists during their testimony and asked if there were any disruptions in loan availability to students. The panelists could not site a single instance of any disruption.
“I am happy to report we experienced no disruption in loan availability to our students either during or after the transition,” said Mark Bandré, the Vice President for Enrollment Management and Student Affairs at Baker University, a private institution serving 3,700 students in Baldwin City, Kansas. “The Direct Loan program is working.”
“Although an avid supporter of FFELP, when the financial markets froze in 2008, when many local and area banks discontinued participation in 2009 and 2010, when remaining private lenders showed an uncertainty in their longevity of participating in FFELP, the decision became clear. Ultimately, I determined the Direct Loan Program was the best option for our students and our institution and advised my administration on January 28, 2010, that we would be making the move from FFELP to DL by the following summer,” said Ron Day, Director of Financial Aid at Kennesaw State University in Kennesaw Georgia, a 4-year public university located in near Atlanta. “ When it was all said and done, I am proud to say that I am not aware of any student who was denied access to student loans due to a school not successfully transitioning into the Direct Loan program.”
“While some in our industry predicted that the 100% transition to Direct Lending was an impossible task, the partnership of financial aid administrators and the Department of Education resulted in a very successful outcome,” said Nancy Hoover, the immediate Past Chair of the National Direct Student Loan Coalition (NDSLDC) and the Director of Financial Aid at Denison University in Granville, Ohio. “To date, I do not recall that there was a single instance in which students did not receive their Stafford Loan funds during and after the transition. This transition of all schools to the Federal Direct Student Loan program could not have been more successful for students, schools, or taxpayers.”
The transition to all direct lending came as part of the Health Care and Education Reconciliation Act, which included the Student Aid and Fiscal Responsibility Act (SAFRA). SAFRA ended the taxpayer-subsidized, federally-guaranteed Federal Family Education Loan Program and replaced it with the William D. Ford Federal Direct Loan Program. Beginning July 1, 2010, eligible students began borrowing directly from the Department of Education at participating schools and the Department no longer paid new subsidies to banks to make loans. Presently, about 6,000 schools are using the DL program successfully.
For more information on SAFRA, click here.
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