Clemson joining federal student-loan plan

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Clemson joining federal student-loan plan
Upstate school follows USC's lead in switching over

By ANNA SIMON - Greenville News


CLEMSON - Clemson University will change this fall from a bank-based to a federal student loan program, eliminating concern over student loan availability and pending changes on Capitol Hill.
The decision follows a recent University of South Carolina choice to convert to the federal Department of Education's Direct Loan program, and it ensures that federal loans will be available to qualifying students and parents.
About 20,000 students at the state's two largest universities have federal education loans totaling $240 million per year, according to Clemson and USC financial aid administrators.
The change will simplify the loan process for students who will no longer have to seek out and compare lenders, said Keith Reeves, associate director of financial aid at Clemson. The loans are basically the same and eligibility is the same, Reeves said.
Federal loans including Stafford, Parent PLUS and Graduate PLUS loans will come directly from the Department of Education through the school's financial aid office. "It removes all concern about the funds being available," Reeves said.
The Direct Loan program would be mandated on July 1 if federal legislation approved by the U.S. House passes the U.S. Senate.
Rather than waiting on the outcome, Clemson will start converting systems now for a smooth transition, Reeves said.
"Even if (the federal legislation) doesn't pass, there is a concern that there may be a lack of funds available by the lending community to make all the loans that may be needed, and that could put students in jeopardy," Reeves said.
"Recent volatility in the credit markets and proposed legislative changes to student loan programs have caused a high level of instability in the private-based student loan market," Reeves said.
Both universities will launch campaigns in the next few weeks to be sure that continuing students with federal loans know about changes they will need to make to avoid delays in the fall.
Continuing students need to sign new promissory notes -which can be done electronically - and make sure their school financial aid office knows they want to borrow.
While this is a significant change, there is no need for alarm, said Ed Miller, USC director of student financial aid and scholarships.
"Part of the reason for the change is to avoid uncertainty and to be able to continue to give money to the students who have borrowed in the past and to assure new students that funding will be available," Miller said.
Students who will graduate with a combination of bank-based and direct federal student loans will be able to consolidate their loans, if they desire, after they finish school and before they begin payments. Help will be available from the financial aid office, Reeves said.
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