No More FFELP program!!

It has truly been a long time, since a post...about 5 weeks, which is tough, but I now have very relevant important information for those students who plan on borrowing funds through the Federal Stafford Loan Program. As a piece of legislation tied to the health care reform bill (I know, where does education finance reform fit into that?), President Obama signed the bill that would eliminate the Federal Family Education Loan Program and all students will now have to borrow their student loans directly through the federal government from a program called the Federal Direct Student Loan Program.

President Obama and his administration felt that by eliminating lending through the various banks that participated in this program, approximately $87,000,000,000 would be saved over a 10 year period, because the banks would no longer receive interest subsidies from the federal government. It is proposed that these savings would go back into education funding by investing these funds into the federal Pell Grant, but that is yet to be seen.

So anyone who has borrowed a federal Stafford Loan through a bank, such as Chase, Citi Bank, or an agency like Sallie Mae, will no longer be able to do so. For any period of enrollment after July 1, 2010, students will now have to borrow through the Federal Direct Student Loan Program. This will cause students confusion when it comes to repayment, as students could perhaps be paying back several student loans to several different lenders....and this legislation was supposed to make things better for students? Time will tell!