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The Daily Wildcat

The Daily Wildcat

 

UA switches to direct loans

The UA will switch to the William D. Ford Federal Direct Student Loan Program this fall after Congress approved the Health Care and Education Reconciliation Act of 2010.

The move to a federal direct student loan program means that student loans will come directly from the U.S. Treasury rather than private bank lenders.

“”The government will be generating the funds and originating and servicing the loans,”” said Bryan Scott, assistant director of UA’s Student Financial Aid.

The main change for UA students receiving loans will be that they will have to sign a new Master Promissory Note.

“”All students that want to borrow will have to sign a new one,”” Scott said. “”I was skeptical at first, but I’ve become a real, real believer in the website that the government has set up, I’m actually surprised at how good it is.””

Scott said once students do the new MPN, the next two steps will be the same as in the past. Students will accept their loans and the amount of money and then complete the loan counseling that’s required.

“”It’s not going to be difficult,”” Scott said. “”We’re going to send out a message to all the continuing students telling them to do that, and if we can get 50 percent of the students getting it done in the summer, that’s fine.””

Scott said he knows there will be people waiting until the last minute to sign their new MPN, which will take students 35 to 40 minutes to complete.

“”It was relatively evident to us that Congress wanted to do away with the other loan programs,”” Scott said. “”We knew that the direct loan was going to be around forever, but we weren’t sure what the future of the private lending would be and so we made a decision in the Financial Aid Office, we better go with what we absolutely know for sure is going to be funding for students.””

The UA stayed with the private lending for so many years because the program gave economic benefit to students, according to Scott.

“”When those economic benefits dried up, there was not a lot of reason for them to continue doing it, plus the Parent Loan and the Graduate Plus Loan interest rates are better in the direct program,”” Scott said.

The actual process of getting the money to disperse to students will be easier because the school will be using just one lender.

“”It really would be beneficial for everybody to go ahead and do the MPN now and get that first step out of the way,”” Scott said. “”The only thing we need to focus on is getting the MPN done now.””

The UA will be sending a team up to Tempe to learn from people at ASU’s Financial Aid Office because they have been working with the direct loan program for several years.

“”We actually switched over in ’96-’97 so we’ve been in for a long time, and we find it works really, really well so we’ve stayed with it all these years,”” said Craig Fennell, director of financial aid at ASU.

Fennell said the UA will have to put in some extra work at first to make the switch, but it will be well worth it.

“”There should be absolutely no change and no drawback for (the UA) at all,”” Fennell said.

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