If you are the parent of a student with a federal loan for college, sometimes called in shorthand a “Stafford Loan,” then you are probably also aware that such a loan may come from one of two federal programs.  These are the Federal Family Education Loan Program (FFELP), operated on behalf of the government by private sector companies, and the Federal Direct Student Loan Program (FDSL), operated by the U.S. Department of Education. 

 The FDSL was created during the early years of the Clinton Administration to provide competition to the FFELP program.  Fifteen years later, schools have voted with the feet and approximately three in four schools continue to use FFELP.  The U.S. House of Representatives, however, voted earlier this year to eliminate FFELP, thereby intending to federalize the student loan program and force schools to go with the FDSL.  The intention was to have this all go into effect by the start of the 2010-2011 school year, which technically means July 1, 2010.

Now months have passed, however, and the U.S. Senate has still not acted on this legislation and, as a result, uncertainty abounds for schools which rely on FFELP to process their student loans.  It seems to me that the reasonable thing to do at this point, only seven months out, is for the Congress to delay any action that would change the program for July 1, 2010 and focus any plan for change on July 1, 2011.

The U.S. Department of Education seems to feel otherwise, however, and has been advising schools to “get ready” to go with FDSL this coming July, even though the U.S. Senate has not only yet to act, but has shown absolutely no indication that it ever intends to act to make this change of the law.

For the next several weeks at least, it is clear that the U.S. Senate will be focused on the national health care debate.  Do you agree that any change this drastic in the way that Stafford loans are  processed should be better thought through?  What type of student loan does your child have – FFELP or FDSL?  Are you pleased, so far, with the way in which the paperwork for the loan has been handled by the school and the loan provider?  Please tell your college parent peers what you think at Hoverings: A Blog for Current and Future College Parents, to be found on the home page of www.collegeparents.org.

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