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New Legislation May Effect Students New Legislation May Effect Students Watch

If a bill to reform the student loan process becomes law, students may not notice much difference because OU is capable of adapting to a federal direct loan program, a director from financial aid services said.

The U.S. House of Representatives passed a bill Sept. 18 that could remove private lenders from the student loans business and would allow students to borrow directly from the government, rather than going through a private lender.

“We’ve been quite aware of this initiative [to change the student loan process],” Matt Hamilton also said. “For years there has been an ongoing debate.”

Hamilton, associate vice president of financial services, said OU participates in the Federal Family Education Loan program, in which the federal government gives subsidies to lenders, which allows the lenders to give loans to students.

“Many universities across the country had the option to switch to direct lending from the government back in the ‘90s,” he said. “Some of them did switch, but I know of some that made the switch to direct lending but then went back to private lending.”

Hamilton said if direct lending becomes law, OU is ready to make the switch.

“The federal direct program could certainly work at [OU],” Hamilton said. “The major changes would be a growth in the federal lending system, and I’m not sure how they will handle the large amount of new input.”

Critics of the bill in Congress said they fear a large expansion of the federal government that student loan reform could bring.

“Abolishing the Federal Family Education Loan student loan program in order to institute a government-run lending program that pulls dollars from the already overdrawn U.S. Treasury is a mistake,” Rep. Tom Cole, who represents Norman, stated in an e-mail. “This is just another fundamentally flawed government takeover.”

Cole stated the reform will cost taxpayers billions of dollars, eliminate private jobs and make students and colleges more dependent on the federal government.

Hamilton said one of the possible downsides to the bill is the possible elimination of jobs in the student loan industry.

“I could see where some could be concerned about job losses, and it is a valid concern,” Hamilton said. “Jobs have the potential to be moved from the private sector to the public sector.”

Another component of the bill is the simplification of the FAFSA form for the application of federal student loans.

Though many in Congress agree on this issue, Hamilton said he feels that though the system may be complicated, it is fine in the long run the way it is.

“If we could simplify it and still get the job done, then that would be good,” Hamilton said.

He said OU processed 20,000 FAFSA forms this year, and the current system is sufficient for the service it provides.

But Hamilton said there have been benefits in the past when the federal government was involved in the student loan process.

“Before the federal direct loan program existed, the private lending industry provided a horrible service to students,” Hamilton said. “When the federal government began to offer the option of direct lending, private lenders stepped up to provide a better service to its customers, and it also increased competition.”

Supporters said they think the reform is a good idea.

“Since they are making the FAFSA easier, that will mean less paperwork and forms, and less paperwork and forms is always a good thing,” said Shugafata Nasir, human relations sophomore.

Nasir said though she has no problems with the current system, she is interested in the reform.

—Casey Wilson contributed to this article.