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SFA Financial Aid will be switching lenders for student loan programs. This scheduled change will affect more than 7,000 students utilizing the Federal Stafford Loans (subsidized and unsubsidized) as well as the Federal Parent Plus Loan.

Currently, loan funding comes from 100+ financial institutions that participate in the federal loan program; with this change, funding will now be allocated through one direct lending source, the U.S. Treasury. All students who plan on receiving financial aid beginning with the Fall 2010 Semester must complete a new master promissory note regardless of previously completed promissory notes. This includes any loans granted to SFA parents as well.

This change will not affect interest rates, as they are set in the same manner and will be appointed accordingly.

"Our biggest concern is educating students about this impending change so that they know what to do and when to do it," Rachele Nixon, assistant director of financial aid, said. The financial aid department plans on rolling out a campaign to educate students on the changes beginning in December with a heavy emphasis in the Spring 2010 Semester after the transition has been completed and the process nailed down.

An important issue for upper level students receiving financial aid to consider is that this change will have a greater affect on their loans.

"Our long-term goals for students is that they understand when they graduate they will then carry two loans, (one) from the previous system and (one from) the new system. At (that) point they may wish to consider a consolidation loan upon graduation to alleviate the burden of carrying multiple loans," Valerie Harrell, assistant director of financial aid, said.

Student loans for the 2008 SFA school year amounted to $68 million, further indicating the scope of this change for students. This transition to direct lending through the U.S. Treasury is being instated in multiple higher education institutions, and the numbers are expected to grow. Over the past two years the financial aid program has begun losing participating lenders due to fundamental issues concerning new regulations that are tightening up the lending process.

While SFA is not legally bound to make this switch, current legislation indicates that it may very well become a mandate in the future.


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