President’s Corner:
Student Loan Transition on the Horizon
By David Gray - President, FAS

2009 has been an extraordinary year of challenges, as the nation's colleges and universities continue to deal with the economic downturn, record-breaking enrollments and major changes in the federal regulations governing financial aid.

With the 2009-2010 academic year underway, now is a good time to look ahead and prepare for the upcoming 2010-2011 award year. Many anticipated changes are on the horizon for federal student aid programs, including a new Perkins Loan program, enhancements to the VA programs, and the proposed transition to the Federal Direct Student Loan (Direct Lending) program -- The Student Aid and Fiscal Responsibility Act (SAFRA) -- H.R. 3221.

The potential change from the Federal Family Education Loan (FFEL) Program to Direct Lending has been a source of concern and anxiety for many college administrators. At FAS, we've received a number of questions from colleges about the changes that would be required, implementation dates and the resources needed to handle the transition smoothly.

Currently, the proposed legislation has passed the U.S. House of Representatives and is being debated in the Senate. If some form of the bill becomes law, students and parents would borrow directly from the government rather than through private lenders. While there are still many uncertainties surrounding this legislation, now is the time to start making plans for the upcoming 2010-2011 academic year to prepare your school if Direct Lending becomes mandatory.

Since the 2010-2011 financial aid process begins in January, it would be helpful to meet with your financial aid professionals to find out their current status in evaluating this proposed change, how difficult it will be to implement, and if the college's automated systems can accommodate Direct Lending. (Most of the major automated systems today have the functions for Direct Lending already built in.)

Institutions that have already made the transition to Direct Lending have found the process to be similar to the Pell Grant processes of payment, reporting and reconciliation. However, Graduate/Professional schools will not have a Pell Grant process to emulate and will need to start at the beginning.

David Bledsoe, an FAS consultant who has worked with both the FFEL and Direct Lending programs, has written an article in this issue of the FAS Compass highlighting the technical requirements of Direct Lending and offering practical advice to help financial aid professionals prepare for the change if needed. We hope you will find his insights helpful. Read his article here.

Other helpful resources are:

The U.S. Department of Education, www.ed.gov

National Direct Student Loan Coalition, www.directstudentloancoalition.org

National Association of Student Financial Aid Administrators, www.nasfaa.org

Some colleges will make the transition utilizing their own staff and resources. Other colleges may need assistance because their plate is already full and current campus needs outweigh the existing resources. If your resources are already committed to other campus priorities, please feel free to call upon FAS. Our consultants are available to help you make a smooth transition. Please contact Nancy Barnett, director of client relations, 770-988-9447 x 101, or via e-mail, Nancy@FinancialAidServices.Org for additional information.

Best wishes for a happy, safe holiday season!

David Gray