Students who use a Federal Stafford Loan to help shoulder the cost of tuition now have to pay a 1 percent application fee. This fee recently surprised many students, who believed their balance was zero, when it appeared on their tuition bills.
According to Michael Dennis, senior loan counselor at the office of Student Financial Assistance, the College Cost Reduction and Access Act set a maximum application fee for lenders of the Stafford Loan.
Signed into law September 2007, the fee for academic year 2007-2008 was 1.5 percent, this year it is 1 percent and next academic year it will be 0.5 percent.
This timeline was constructed to completely eliminate the fee by 2010-2011.
But students at the College were not charged the 1.5 percent fee last year because, “Historically when (the College) worked exclusively with Sallie Mae (a provider of student loans) only during the academic years of 2006-2007 and 2007-2008 did Sallie Mae not charge an application/processing fee,” Dennis said via e-mail.
However, because increasing economic turmoil has changed the financial landscape, especially the loan market, processes have changed.
“With the state of today’s market, and with the only buyer for student loan bonds currently being the federal government, most Stafford lenders have now chosen to charge the application fee,” Dennis said.
The College typically supplies a list of approved lenders. Last year’s list included Sallie Mae, Citibank and Student Funding Group.
This academic year the College did not provide a list “in an attempt at fairness to all lenders, and to give students the freedom to select the lender of their choice,” Dennis said.
“However students were able to choose their Stafford lender through HESSA’s (the New Jersey Higher Education Student Assistance Authority) Web site (HESAA.org), and by using their lender comparison tool, Real Choice,” he added.
The application fee had some students perplexed as to why the College did not give them advance notice.
Matt Owen, senior communication studies major, said, “I wouldn’t be surprised if plenty of students still don’t even know about (the application fee).”
When Owen went to pay his fee he asked why no e-mail was sent.
“I was told that since it wasn’t a fee (the College) added on, but rather money the lender did not pay, that they were not obligated to inform us … even though they had already updated our bills to say we didn’t owe anything, and we had to cover this lender fee through (the College), instead of having it tacked on to our loans,” he said.
Dennis explained there were a variety of ways, excluding direct e-mail, students would be aware of this fee.
“It was on this site (HESSA.org) that participating lenders posted whether or not they were charging an application fee. Also on our own Loan Processing Web site we suggested to students that when choosing a lender to make sure to research whether or not there are any upfront or backend fees to their student loans,” Dennis said. “Additionally any documents forwarded to the student by the Stafford lender would legally have to disclose such application fees.”