A better way to get government loans for college began on July 1. Now the Department of Education originates all federally guaranteed student loans. Earlier this year, bank lobbyists were outraged when a measure ending their student loan racket was added to the health care reform bill. The government ended billions of dollars in taxpayer subsidies by removing banks as the middleman for federally guaranteed loans.
Article source: Federal student loan move ends taxpayer gravy train for big banks by Personal Money Store
Federal student loan shift saves taxpayers billions
The government estimates that it will conserve $ 68 billion in yen years by ending student loan subsidies for big banks. Colleges and universities are required to offer all loans through the Federal Direct Loan Program (FDLP) from July 1 forward. Students and taxpayers can be served better by the FDLP, the government said.
Changes to federal student loans
All new government loans for college are now issued directly through the Department of Education’s Direct Loan program. USA Today reports the Federal Family Education Loan Program (FFELP), which had allowed banks and other commercial lenders to offer federally guaranteed loans, has been eliminated by the FDLP. The change affects PLUS (Parent Loan for Undergraduate Students) for parents and PLUS loans for graduate and professional degree students as well as subsidized and unsubsidized Stafford Loans for undergraduate and graduate students.
Scholarships take the place of bank profits
Money saved by ending commercial bank subsidies for government college loans goes to the Federal Pell Grant program. Pell Grants, money that doesn't have to be repaid, go to students from lower-income families. This fall Pell Grants increase $ 200 to a $ 5,500 maximum and remain at that level until 2014, the Native Times reports.
new program changes needs for students
This year students with a federally guaranteed student loan must file electronic forms through the federal government's secure site for the new program at studentloans.gov. Kenosha News reports the change is putting pressure on colleges and universities in both responsibility and also the volume of students that have to be processed. Financial aid directors are advising students and/or their parents to contact their college's student financial aid office with questions faster, instead of later.
More data about this topic at these websites:
usatoday.com
nativetimes.com
kenoshanews.com
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