Law steers more money to students
Wednesday, March 31, 2010
By Cathy Bayer
Posted Mar 31, 2010 @ 09:39 PM
Last update Apr 01, 2010 @ 12:20 AM
ROCKFORD — Evanya Perry pushes the idea of free money — or at least student loans — on her friends, family members and other college students.
The 19-year-old Rockford resident is in Rock Valley College’s nursing program, and she works in the college’s financial aid office. Scholarships through the Rock Valley College Foundation and federal Pell Grant Program help pay for college.
"I’m adamant about telling people, ‘Free money, free money, free money,’ ” she said.
Legislation signed Tuesday by President Barack Obama streamlines the federal student loan process and makes more Pell grants available. That’s key because officials at Rock Valley, Rockford College and Northern Illinois University say the recession has more of their students seeking financial aid.
The new federal legislation cuts out the middleman — banks — and makes the Department of Education the direct lender. It replaces the Federal Family Education Loan Program with the Direct Loan Program.
The move is expected to save several billion dollars, which will be used to fund more Pell Grant programs. The $5,550 annual per-student maximum is expected to grow to $5,975.
More than 8 million students get Pell grants each year. Education officials say more than 820,000 additional grants should be offered by the 2020-21 school year.
The legislation doesn’t change the loan process at Rock Valley or NIU, which switched to the Direct Loan Program this school year and in fall 2008, respectively. Rockford College will transfer before the July 1 deadline.
Inali Saghu, associate director of financial aid at NIU, was surprised at how smooth the changeover happened, and students haven’t complained.
"When we transitioned, it actually ended up being a lot easier on our students because we didn’t have to wait for the bank to send students money,” Saghu said. "It actually has really been a great thing for our students.”
Students who already have a federal loan have to sign a new promissory note if their school hasn’t made the switch to Direct Loans. Interest rates will remain the same, and the Direct Loan Program offers a repayment option with income-sensitive plans that adjust to each person’s salary after college, Saghu said.
The change can put more of a burden on smaller schools that don’t have up-to-date computer information systems, Saghu said. Each college will take responsibility for tracking students’ promissory notes and payments.
Small schools formed strong partnerships with lenders and counted on them to help students understand their payments, said Todd Free, assistant vice president and director of student administrative services for Rockford College.
"For the students, understanding and managing debt on the front end is incredibly important,” he said. "Time will tell if this is the right thing.”
Reach staff writer Cathy Bayer at firstname.lastname@example.org or 815-987-1395.
This story appeared at http://www.rrstar.com/carousel/x1838119586/Law-steers-more-money-to-students on March 31, 2010.