Students will notice little change in loan process

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Students will notice little change in loan process
By JOSH HUMPHRIES
The Daily Reflector
Sunday, April 4, 2010

East Carolina University students will notice few changes to the process for obtaining students loans after the new law governing federal financial aid goes into effect, said Julie Poorman, director of the financial aid office at ECU.
The new law will eliminate fees paid to private banks to act as intermediaries in providing loans to college students and the federal Department of Education will manage and grant student loans beginning this summer.
“We are hoping to minimize the impact,” Poorman said. “We had forewarning that this was likely coming and we have been setting up the software.”
The biggest change students will notice will be in their repayment options after graduation, she said.
“Student will not notice a difference except when it comes to repayment,” Poorman said. “This legislation created new, more user-friendly options for repayment.”
Congress has set the interest for student loans for years, but private lenders controlled the repayment schedule. The new law will give students different options for repayment.
Students who borrow after July 2014 will be allowed to cap repayments at 10 percent of income above a basic living allowance, instead of 15 percent.
If graduates keep up with payments, their balances will be forgiven after 20 years instead of 25 years — even sooner at 10 years for those in public service like teachers, nurses and military personnel.
Because the federal government will not be paying administration fees to banks, it will save billions of dollars. The law includes a $2 billion investment in community colleges across the country.
Poorman said students will have to sign a new promissory note and conduct a new loan entrance interview.
Students who want loans for the second semester of summer classes this year must get materials in by June 25, Poorman said.
Private lenders will not be allowed to make new loans after July 1, when the program will be taken over by the Department of Education.

Contact Josh Humphries at jhumphries@reflector.com or (252) 329-9565.
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