04/05/10 — College loan law effect still mystery

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College loan law effect still mystery

By Phyllis Moore
Published in News on April 5, 2010 1:46 PM

It's a little too soon to tell how the White House's proposal for college loans will play out for area students, some officials say.

A law signed by President Barack Obama last week could result in some big changes as the government takes the reins as primary issuer of student loans.

But at Wayne Community College and Wayne County Public Schools, officials are taking a wait-and-see approach.

"We don't have a whole lot of information," said Dr. Kay Albertson, president of WCC. "We know what the law says, but we don't know how it's going to be administered."

According to early reports, the proposal would cut banks out of the student loan business, instead opting to provide money either directly from the government or private financial institutions. A chunk of the savings would go toward Pell Grants for college students, while there is also speculation that community colleges could receive $2 billion over the next four years through a competitive grant program to provide training and education programs.

"That means zero to us," Dr. Albertson said. "They haven't actually said what's eventually going to come to us.

"What we know is there will be more money available to us through the Pell grants over the coming years. I do know that there's even (language) to the fact that now a student only gets Pell grants to cover two semesters. (That would extend to) three semesters. It will be more money via this reform but it's not going to be additional money."

Without having further information, Dr. Albertson said she is uncertain what the college's role would be in the administering or tracking of student loans.

"It would make it better in one way for all community college students because the majority are first-time college attendees or low-income," she said. In such cases, she speculated, "cutting out the middle man would be helpful."

"More students would probably be able to afford college but from the specifics of how we're going to manage it, we don't have any details."

As with anything, Dr. Albertson said there will likely be "positive pieces," particularly if the proposal affords students a broader array of opportunities to get more funding with less debt incurred.

At present, though, it is still very expensive to get loans.

"We're having to oversee these loan programs, and that's a real complication for community colleges that have a very small financial aid staff," she said.

Beyond the dollars and cents aspect, there is another area of concern, Dr. Albertson said -- such a proposal would require colleges to pull additional resources in the form of human resources.

"The student loan program is so involved," she explained. "In order to give the proper consultation to these students, it just takes a lot of people. That's been one of the complications with many of the colleges not wanting to be in the loan businesses.

"We have not been doing Stafford student loans for about a year and a half because of the default rate."

Now that the law has been passed, Dr. Albertson said it's a matter of paying attention to how the scenario unfolds. Certainly there will be pros and cons and hopefully some advantages for students who qualify for any student loans.

"What helps one agency is going to hurt another," she said. "The private banking industry is going to have job issues -- it's one of those things -- what this is going to mean with each of the colleges, how we're going to manage that, we just don't know."

High school guidance counselors likewise have not been apprised of how to enact changes for students who will be seeking financial aid for college.

Dr. Sandra McCullen, associate superintendent for curriculum and instruction for Wayne County Public Schools, said the district is keeping a watchful eye on the situation.

"This is just another (change) that will affect us in many ways," she said. "But we just don't know the extent of what this will involve."

There has been some speculation that the plan in its entirety will take several years to unfold. Dr. McCullen said that it is difficult to project how quickly things will be implemented.

"Sometimes these things happen overnight and sometimes it's a slow transition process," she said. "How that rolls out to the local school system, we're still waiting to hear. We're all in a wait-and-see mode to see how it will play out."

--The Associated Press contributed to this story.