Financial Aid Update: Things Are Looking Up
Written by Bwog Staff
While much of the hubbub in Washington in recent days has centered on the passage of the healthcare bill, students have yet another reason to celebrate: the passage of a bill set to thoroughly reform the student loan system. The Healthcare and Education Reconciliation Act will, in effect, remove the middleman from the student loan process. Basically, students will take out loans directly from the government, not large banks and lenders like Sallie Mae. It’s all in more detail here. Suffice it to say that President Obama is “pretty stoked.”*
*Not a direct quote.
What does this mean for Columbia students? Glad you asked! In an email sent yesterday, Dean of Financial Aid Daniel Barkowitz laid out the details:
This morning, President Obama signed a reconciliation bill that significantly reforms the processing of federal loans and grants for students. In light of this legislation, Columbia University will transition to the Federal Direct Student Loan Program beginning with the 2010-2011 academic year.
Like the existing Federal Family Education Loan Program (FFELP), the Direct Loan Program provides federally insured loans to students and their families. Rather than working with private lenders who process and disburse federal loans, students and their families will now receive federal loans directly from the U.S. Department of Education.
For the 2010-2011 academic year, all federal Stafford and PLUS loans will be processed through the Direct Loan Program of the U.S. Department of Education. This procedural shift will not affect borrowers’ eligibility, but the process will be different. Students and parents who have existing loans through FFELP will continue to work with private lenders for these existing loans. All future loans will be issued through the Direct Loan Program. Upon graduating, students may elect to consolidate their federal loans into one payment with the U.S. Department of Education.
We recognize there will be many questions regarding this transition. The University’s Student Financial Services website (http://www.columbia.edu/cu/sfs/) has a set of questions and answers that will be updated regularly. Federal student loan recipients will receive more detailed information via e-mail in the coming weeks. Please know that we will provide as many resources as possible to ensure that this transition occurs smoothly.
Dean of Financial Aid