New loan system adopted
Seton Hall is moving from the Federal Family Education Loan to a direct lending program, a change that will take effect in the 2010- 2011 academic year.
Students who take out government loans, Stafford (subsidized or unsubsidized) or Parent PLUS loans, will now borrow directly from the federal government instead of borrowing through a private bank that participated in the federal loans program.
According to Javonda Assante, senior director of financial aid at Seton Hall, this change occurred after a number of banks dropped students’ loans and left them scrambling to find funds for this semester.
“Instead of taking out federal loans through private banks, students will borrow directly from the federal government, which guarantees (students’) funds,” Assante said. She added that this change would have happened anyway due to recent federal legislation, but that Seton Hall decided to make the change earlier to prepare.
“Everyone saw what was coming,” Assante said. “We just wanted to take the time to do it beforehand.”
Assante said the Financial Aid Office worked with the Bursar and the IT department, among others, to discuss the pros and cons of changing the loan program, and felt that borrowing directly from the federal government would benefit students in the long run.
According to Assante, students will have lower interest rates when borrowing directly from the federal government, and will have more payback options.
“Instead of the four payback options students get with (FEEL), there will be five options,” Assante said. “The fifth option will be an income-based payback option, which was not available before.”
Assante explained that the new option will allow students to make payments on their loans based on what they are making at the time.
The only concern students may have, Assante said, was that they would have to consolidate their loans after they graduated.
“(But) most students choose to consolidate their loans after they graduate anyway,” Assante said.
She added that the only major thing to change was that students would have to fill out a new promissory note, even if they had filled one out previously.
“Even though we said students would only have to fill a promissory note out one time, they will actually have to fill one out just once more, and then they’ll be done,” Assante said.
Sophomore Joseph Yankus said he saw the change as a good thing for Seton Hall.
“The benefits such as interest rate reduction for on-time payments and the option for participation in the Public Service Loan Forgiveness Program seem appealing, especially the Loan Forgiveness Program,” Yankus said. “I’m not sure what the terms for participation in that program are, but it’s nice to know it could be an option. We dig ourselves a huge hole of debt by coming to Seton Hall, and knowing that Financial Aid is trying to make changes to benefit the students is relieving.”
Yankus added that he didn’t see filling out a new promissory note as a problem. “I don’t remember this being too grueling of a process when I did it freshman year, so I don’t think these changes are going to affect me drastically.”
Assante said that, overall, this process should help students, especially after a few found themselves without funding when private banks such as Chase, Bank of America and Wells-Fargo dropped federal loan program.
According to Assante, studentloans.gov, which is geared towards helping students with their questions about financing their education and federal loans, will become available April 1.
When Seton Hall students accept their loans for the next academic year, Assante said there will be a link to the government Web site so that students may easily access it.
Caitlin Carroll can be reached at firstname.lastname@example.org.