Thursday, April 30, 2009

Change for loans, Loan People?

The federal government has long promoted higher education by subsidizing student loans from banks, non-profits, and government bodies like Kentucky's Student Loan People.

President Obama's budget proposal asks Congress to:
  • Eliminate those subsidies to other lenders.
  • Increase the number of students who can borrow directly from the government.
  • Take competitive bids for private contractors to service the loans.
  • Use the subsidy savings to expand Pell grants to low-income students.
If the proposal passes,the Student Loan People will substantially downsize their current staff of about 425, according to today's Courier-Journal report. The remaining employees will handle current loans, compete for federal contracts, and administer state scholarships, including KEES.

The article includes no student perspective, but does note that:
Some Kentucky universities have already started shifting their student loans to the Federal Direct Loan Program. The University of Louisville announced last month that starting this fall it would do so, citing the desire for a simplified process that would offer students a more stable and predictable funding source.

The University of Kentucky, Kentucky State University and Morehead State University also use the direct loan program.
To read more, check out the White House proposal here, and the C-J article here.

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