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Student loan reform will increase available funds

A bill currently on the floor of the U.S. Senate would require that all student loans come directly from the federal government rather than from private lenders.

Duke’s Office of Financial Aid is preparing internal changes to accommodate the impending Pell Grant bill, The Student Aid and Fiscal Responsibility Act, which would mandate that students take loans directly from the federal government, said Alison Rabil, assistant vice provost and director of Financial Aid.

“The direct lending would not affect our students significantly and it might make things a bit easier for them,” Rabil said. “It would affect our internal processing and the loan office internal procedures the most. For the student, the process to borrow a student loan is the same.”

If the Pell Grant bill passes and all student loans become direct loans in the future, students will face less confusion regarding who to pay for their loans because there will be only one lender—the federal government, Rabil noted.

The Pell Grants bill has passed through the U.S. House of Representatives and is now on the Senate floor, said Chris Simmons, associate vice president for federal relations. Simmons noted that once President Barack Obama signs the bill, the Department of Education will guide universities to make procedural changes to student loans.

Rabil added that the nature of possible internal changes within the Financial Aid office are not clear right now because the bill has not gone through the Senate yet, but she said she expects the bill to pass and lead to changes. Pell Grants would create more funding for student loans because it “would get rid of subsidies that go into the middle men [banks],” Rabil said.

Simmons noted that additional funding for grants and loans will be available if the bill passes as is.

“We anticipate that the bill is not going to significantly change from what the House set on,” he said. “There will be additional money, which is great for students.”

From a student perspective, having just one lender instead of multiple will decrease confusion and possible errors, said senior Halley Hu, a member of the Financial Aid Initiative Student Advisory Council.

“I also thinking freeing up more money by making the process direct is certainly a good initiative,” Hu said. “Once the bill passes, it will hopefully give students more options in terms of financial aid. At least not limit students’ higher education opportunities.”

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