By Marisa Silva
The House of Representatives passed a revision in the New Jersey student loans program legislation on March 21 that will ultimately cut out the “middlemen” in the loan distributing process.
This Congressional bill proposed that the private firms who offer the Federal Family Education Loan Program (FFELP) will be removed and instead will allow the loans to come from the colleges and go directly to the students.
Based on calculations made by the Congressional Budget, over $62 billion could be saved through this process and $36 billion of that would go toward Federal Pell Grants.
According to studentaid.ed.gov, the Federal Student Aid Web site, eligibility for a Federal Pell Grant includes “exceptional financial need” and is given to undergraduate students only.
Once the student submits the Free Application for Federal Student Aid (FAFSA), containing their family’s financial information, the government will award and distribute the Pell grant to those who qualify.
According to Michael Dennis, student loan manager in the Office of Student Financial Assistance, “The College made the decision to become a Federal Direct Lending institution prior to this current academic year.”
Dennis explained that because the College is already involved in a Direct loan program, most students will not be affected by this bill.
“(The College) did however allow students to choose a different Federal Loan lender this academic year,” Dennis said.
Those students will be the only one’s affected by the FFELP revision.
When asked about his position regarding the bill, Dennis said that because of the economy, the “Federal Student Loans were no longer profitable to the private lending firms and in the end were being sold back to the Department of Education.”
He explained that in this process, the private firms were essentially becoming direct loans, so this revision was the next needed step.
Dennis said if the revision accumulates revenue of $36 billion toward the Federal Pell Grant Program, “then of course one would be in favor of this bill.”
Dennis also added that because the College has already had the chance to become a Direct Lending Institution prior to this revision, he said that it has been a “smooth transition” and is “very satisfied with the level of customer service our office has received from Direct Loans.”
Dennis hopes this will continue when, because of the revision, all higher educational institutions are required to switch to Direct Lending.