Higher Ed Utah » Congress

Be Prepared – Changes are Coming to Student Loan Programs

Brett Lutz — Wed, 10 Mar 2010 16:19:52 +0000

Growing up in Utah, and being a Boy Scout, I often heard the term Be Prepared. That is great advice, even if it is kind of vague. Today, I want to pass on that same advice, with just a little more information. If you are going to college, and need to take out a student loan, be prepared for changes.

On September 18, 2009, the House of Representatives passed the Student Aid and Fiscal Responsibility Act (SAFRA). This bill does many things, one of which is end the Federal Family Educational Loan Program on June 30, 2010. This means that you would no longer be able to get your Stafford or PLUS loan through your bank or credit union. The Department of Education will be the only lender making traditional student loans.

What does this mean to you? You need to pay careful attention to your schools instructions and act on them immediately! Your school will provide you with more information on these changes. If you have already received information about these changes from your school but have questions, please contact the financial aid office on your campus for the most up-to-date information.

In the meantime, UHEAA and its partner lenders will continue to provide you with student loans and the highest possible level of customer service.

If you are interested in a full overview of SAFRA, you can find more information here: http://www.nasfaa.org/publications/2009/ln3221summary092209.html

Loans Sold to Department of Ed?

kpage — Wed, 20 Jan 2010 15:30:11 +0000

If you are one of the borrowers whose loan was transferred to the Department of Education, you may feel sold down the river right now. If its any consolation, UHEAAs feelings are like a mothers on the first day of kindergarten we hope the Department plays nicely with you. Now, put aside the creepy imagery of UHEAA being your mother for a moment.

We owe you an explanation.

Youve heard (and heard, and heard) about the tightening credit markets. Banks today are practically slot machines, dispensing cash only to a lucky few.

Just as the markets were crashing, Congress made it harder to service student loans. Many banks, including banks that put up the money for UHEAA loans, stopped making student loans altogether.

In todays economy, the only way UHEAA can find capital is to transfer loans to the U.S. Department of Education. What do we use this capital for?

Back to the creepy analogy. A mother sends her kids to school because she knows the importance of education. (And because she might go crazy if they stayed home all day, but thats another discussion altogether.)

Well, UHEAAs purpose is similar: Get Utah students to school. Everything else we do, including loan servicing, is secondary. Money from the transfer is used to make new student loans, an investment in Utahs future your future.

Five Reasons the SAFRA Act of 2009 May be Bad for Students

kpage — Thu, 29 Oct 2009 21:14:21 +0000

A recent article from Gocollege.com lists the 5 reasons why the proposed student aid legislation may be bad for students. Very soon the senate will be taking up this important measure related to college students and financial aid. On the surface the bill looks like a massive step forward for students and families, but the article states that “as the legislation becomes clearer many have begun questioning this massive change. Is the legislation really a positive step for students?”

The 5 reasons the proposed legislation may be harmful to students:

1. The Legislation Eliminates the “Middle Man”: The middle man in this case is the highly valued non-profit agencies, like UHEAA, that work for students and parents offering free college planning and information related to financial literacy and financial aid. Under the proposal the non-profit agencies (UHEAA) would be eliminated.

2. A Potential Increase in Loan Defaults: The non profit agencies also develop greater student understanding of the loan process and as a result a lower default rate on student loans. A recent Deseret News article reveals that Utah’s default rate is THE lowest in the country thanks to UHEAA’s default aversion team. http://www.deseretnews.com/article/705340433/Loan-defaults-lowest-in-Utah.html?pg=2 “Achieving the lowest default rate in the nation doesn’t happen from Washington, D.C.”, said Senator Hatch. “It comes from experienced and knowledgeable local people taking the time to give personal attention.”

3. No Savings for Students or Families: The article points out that the schools currently using a loan program other than the Direct Loan program will have to invest staff, time and monetary resources to change systems and processes. The costs of implementing this program will likely be passed on to students through increased tuition and fees.

4. Handling the Increased Demand: The U.S. Department of Education will be tasked with converting an average of nearly 500 schools a month over a 9 month period. In the past, the program has converted 1600 schools over a 16 year time frame.

5. Increasing the National Debt: According to the Office of Management and Budge (OMB), the debt that switching to an all Direct Loan program will incur will raise the national debt by $900 billion dollars over 10 years. Those students who benefit from the program will actually pay twice, once when paying off the original student loan and a second time when paying taxes necessary to eliminate the increasing national debt.

For more information and to read the entire story, please visit gocollege.com http://blog.gocollege.com/2009/10/26/the-student-aid-and-fiscal-responsibility-act-of-2009-2/

Keep Student Loans Local

Higher Ed — Tue, 20 Oct 2009 22:37:37 +0000

The Utah Higher Education Assistance Authority (UHEAA) help Utah students & families plan, prepare, and pay for college. The pending Student Aid and Fiscal Responsibility Act or SAFRA proposes to jeopardizing the local, responsive service that UHEAA has provided for more than 30 years.