Officials say direct lending has aided UNL j
By Jessica Fargen
Staff writer
The business of making student loans is a
lucrative and sought-after business across the
country.
Until 1995, UNLs loaning was done through
the Federal Family Education Loan Program,
involving banks and groups such as the Nebraska
Higher Education Loan Program.
The University Nebraska-Lincoln switched
over to direct lending in 1995-96, when then-chan
cellor Graham Spanier approved the change, said
James Griesen, vice chancellor for student affairs.
Griesen said direct lending saved students
money by bringing competition to the student loan
market and simplifying the process.
“It’s made our financial aid office work far
more smoothly than in the past,” Griesen said.
But representatives from the Federal Family
Education Loan Program disagree and say they
want UNL back.
Tom Melecki, vice president of policy,
research and planning of the Nebraska Student
Loan Program, remembers Mien UNL switched.
“It was a sad day for us,” he said. “UNL was
the flagship institution. It has a great student body
that takes loan obligations real seriously.
“We lost a real highly valued group of cus
tomers.”
Since the changeover, the FFELP program has
started to offer students a chance to shave 1 per
cent off of their interest rate if they make prompt
payments for 10 months; 2 percent for 24 months,
Melecki said.
Federal legislation in the recent Higher
Education bill also may offer a rate-saver plan for
direct-lending students, but it was not certain yet,
Munier said.
Melecki also pointed out that 45 Nebraska
banks have formed an alliance that since May has
served as one large source of lenders, instead of
hundreds of individual banks.
But Munier said the alliance does not involve
Cut the rate
Under the federal 1998 Higher Education Act, the interest
rate for student loans wi luced. In order to receive
that lower rate, students those with college debts
must consolidate ill allow them to
get the new ratj
Who is
Only studenl „ _ loans car) consolidate
and get the lotvtff its who currently have a
mixture of loam ins loans or FFELP loans
cannot consolidaSl new rate. People no
longer in college wf of any type or
mixture can consolidate , , loan and get
the lower rate.
How is Jt done?
In order to consolidate, r interest
rate, studenf£§nd people arrange to
do so in on *
~~sas%a;
■ in person, by 1. iff lenders.
■ online, by visiting http^ '.ed.gov/directloan
■ phone, by calling the Ui Department of Education at
(800) 557-7392:"
Jon Frank/DN
all the banks in Nebraska that contract student
loans, thus requiring students and the university to
still deal with several other lenders.
Tom Butts, associate vice president for gov
ernmental relations for the University of
Michigan, was a part of a lobbying effort in
Congress that produced the 1993 bill authorizing
direct lending.
“It came about out of, really, decades of frus
tration with the guaranteed student loan program
(FFELP), which could hardly be characterized as
a student-friendly or institution-friendly pro
gram.”
Butts said the FFELP program involved too
many parts, and extra costs were incurred by stu
dents.
Overall direct lending makes up one-third of
the loan market and is used at 1,300 universities,
Butts said. One-half of those are four-year public
universities.
The clash between banks and universities is a
national political issue, Butts said, and many
financial aid administrators are under pressure to
switchback.
But Munier said he wanted to stick with direct
lending at UNL.
“Students and families continue to report for
us how much simpler the direct loan program is
for them to understand,” Munier said.
Michael Watkins, who graduated from UNL
in May, said direct lending made sense for him.
“Direct lending is a lot more beneficial to stu
dents because of the convenience it provides, and
because you have people there who are present
and can help you with your services,” Watkins
said. He is a 23-year-old who now is a first-year
pharmacy major at the University of Nebraska
Medical Center.
Watkins took out a direct loan at UNL his
senior year, but most other schools in the state do
not use direct lending.
Having used direct loans, and now indirect
loans, Watkins now can appreciate UNL’s direct
process. He said most UNMC students don’t
know what alternatives could be available to them.
“When I applied for loans at the medical cen
ter, it was a hassle,” he said. “At the medical center, '
I think people overall have the feeling and have the
point of ‘Deal with it. There’s no point in com
plaining about it.’”
Loan plan provides lower interest rates j
LOANS from page 1
UNL students, or 45 percent, who has student
loans.
In the five years Janssen has been at UNL,
she has worked 40 hours per week at jobs
including waitressing, instructing aerobics and
tutoring.
“If it wasn’t for loans and me working my
butt off, there’s no way I’d be in school,” she said.
But Janssen is luckier than many students,
because her $20,000 in loan debt will be paid
through a graduate program she plans on enter
ing after graduation.
Shannon Magnuson, a sophomore comput
er science major, is not as fortunate.
He took out a loan in the fall of 1996, then
had to drop out because he could not pay it. Now,
he is back in school and considering a loan
again.
“It’s really the only option I have now, short
of relatives, but I feel kind of bad about that,” he
said.
Magnuson works about 30 hours per week
in the computer center at the 501 Building on
campus, but that is not enough.
“Lately, nowadays you have to have a loan to
go to college,” he said “And college is necessary
to get a good job.”
Munier agreed and called borrowing to pay
for an education “investing in yourself,” but said
borrowing for expendable items such as cable
television should be kept to a minimum.
Students such as Magnuson may not realize
they can save money on their investments
through the new interest rate.
UNLs financial aid office did not notify stu
dents that they had to consolidate their loans.
But Munier said he did forward the information
to the UNL Alumni Association to put in its
magazine. . '
Munier said the interest rate change is a new
option in student lending that he has never
encountered, but he welcomed the change and
the benefits it held for students.
Students and others with college loan debt
can consolidate their loans online at
http://www.ed.gov/directloan or by calling the
U.S. Department of Education at (800) 557
7392.
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The following is a list of goals ASUN has set and the progress it has made.
1. Continue commitment to diversity through sponsored events and increased
communication with the campus community.
—ASUN President Sara Russell and Andy Schuetman, Human Fbghts Committee chairman, are working
with a universitywide committee to coordinate activities for Martin Luther King Jr. Day on Jan. 19.
2. Maintain regular campuswide community service projects.
- Senate members completed their second community service project Tuesday by worting on the UNL
Habitat for Humanity “MU House.” Ryan Anderson, chairman of the Campus Life Committee, said ASUN’s
next service project will be with Day Watch, a homeless shelter.
3. Enhance technological services to students.
-The ASUN Communication Committee is working with Maggie Doyle, pubic relations iaison, to update
student government information on the World Wide Web. Russell said ASUN would Ike student input
on what should be included on the ASUN Web page.
4. Research the options to make student evaluations more effective.
- Kara Slaughter, Academic Committee chairwoman, saidthe committee has accompished its goals
regartlng student evaluations. Slaughter sad next semester the committee wB send out an aWaculty
7V e-mal message that includes several midsemes^ feedback ferrfropfons.
5. Address campus parking concerns.
t>—h ightotnew parting structure construction, Russel said sheislooking into legislation deaing with
potential parting fee increases.
o. continue enorts to unite city ana tast campus^ v
-TefyWhite^Enwonmeotal Issues Suboomnfatee dairrnan,sai^he committee is promoting mass
trans^servi^es onS&Tranbe^No. 24 and right shuttle service between City.and East campuses. WNte
saidfheWartsmareUNLstuden& t»|y members andstalfbuse the busSsto ride between campuses.
7. Ctea^la^ roproeonWion of students through outreach initiatives.
- Russel conShuep'SaW towrvhal meeting^and openferums to enhance dscussion
arwngstudents.l'flpicstor future town halmeefogswi include parking concerns and dscussions about
a rih cciS^Mional amer%ient creattog a new student body assembly.
a Lobbylbrstuclentlciput and concern reganfing theASUN government party
system. ‘ '3 ' % - f* I
-^Last w^ek the senate vMad to send back toe Sectoral Comoisston^ proposed 1999 election rules
, artoprocedties. Tito corrytesionwIptefienffSlfeions and adcStonalcttonges to toe proposal today
for a senate vote.
9.Wori( to promote alcohol awareness andeducation campuswide.
—ASUN members ate researching processes and metootte on how to award toe Laura Cockson
Memorial^cholarshi). Russell sard a scholarship wi be awarded toisyeartoaUNL student who actively
' promotes and brings awareness to toe adverse affects ot alcohol.
