Along with passing a massive overhaul of the nation’s healthcare system, the U.S. House of Representatives voted 220-211 in favor of a revised student financial aid bill on Sunday.
The revision — intended to ensure that a majority of the Senate will support the legislation — has been sent to the Senate, where it is expected to gain approval.
Among other provisions, the Student Aid and Fiscal Responsibility Act calls for direct lending from the federal government to students, thus reducing the role of private intermediary lenders. This process will be conducted through the William D. Ford Direct Loan Program.
The revised bill “would help fund a shortfall in the student loan program,” Penn Office of Federal Relations Associate Vice President Bill Andresen said.
“We support passage of this bill, as do all of the major associations that support research universities,” he added.
The program is a “more reliable lender for students and more cost-effective for taxpayers,” according to the SAFRA legislation.
The bill, originally introduced last September, will save the government billions of dollars over the next 10 years.
Penn will begin certifying loans through the Direct Loan Program this summer but began planning for the possibility of such a program in 2008, according to Student Financial Services.
The University currently uses the Federal Family Education Loan Program, through which the government subsidizes private lenders who provide student loans. Under the new program, direct loans will be “administered by the Department of Education and funded through the U.S. Treasury,” according to the Congressional Budget Office.
With the national switch from private to federal loans, “dealing with a single federal entity rather than multiple lenders and guarantors” will hasten the “certification and disbursement” process, according to SFS.
Additionally, the new program provides lower fees and interest rates than FFEL, offering 7.9 percent interest rates as opposed to FFEL’s 8.5 percent rate.
As a result of the bill, continuing students must sign a new Master Promissory Note in order to make loans, according to SFS. Students will be contacted with more information later this semester.
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