On Loan

This technical glitch with the new Department of Education student loan website is one of those things that makes for good copy (and great cheap shots) but is ultimately insignificant.

But, it does hint at the vulnerability of the shift to direct loans:  If the Department doesn’t have the capacity to administer it the politics around all this will change.  We ended up with the racket that President Obama just fixed because the federal government was doing such a poor job administering student loans.   A dirty secret of the reforms, however, is that many of the private loan entities will continue to service all these loans, just under different terms.   But it will be the Department overseeing all this much more — and being accountable for it. 

So if the Department doesn’t have the full time staff and expertise to really oversee this it could open the door to revisit loans yet again.  And that capacity comes from parts of the federal budget that don’t get a lot of attention and where there is room for a lot of political mischief.  This year’s budget requests more support for this function, so keep an eye on all that.  For appropriators on the Hill items that send money to states and districts are more interesting than items that send money to departmental management…and for people who want to discredit this reform this is where they’re going to focus their attention, not on some malfunctioning website.

2 Replies to “On Loan”

  1. One of these days, someone who is in a position to really affect a change will figure out that from the borrower’s perspective, the challenges they face when it comes to the actual origination of their student loans pale in comparison to the challenges they will face with the actual servicing their loans. As a 27 year veteran of student financial aid and higher education, I can only hope that for the sake of students, this someone figures it out sooner rather than later.

    Respectfully submitted,
    Paul S. Garrard, President and Founder
    PGPresents, LLC

  2. It’s inevitable that programs to do with money give loads of reasons to criticize. As a citizen from California with long time connections to community colleges, I’m so thankful that a way was figured out to pass this bill. It is hard enough to make your way in today’s colleges without working several jobs just to pay for books, student fees, not to mention tuition.
    The only complaint is the difficulty in completing Pell grant applications. I’ve talked to some high ups in the U. S. Department of Ed who say the forms are being simplified. Let’s watch for that fix.

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