Student Aid act signals big changes for student loans

The Student Aid and Fiscal Responsibility Act (SAFRA) is already changing the way students pays for higher education. It was included in Public law no. 111-148 which is probably best known as the Patient Protection and Affordable Care Act.

U.S. Representative Lloyd Doggett held a press conference on Rio Grande campus on Tuesday, Mar. 30 regarding these changes.

"It's been greatly overshadowed by health care naturally, but for many students this has more direct immediate effect," Doggett said.

Originally, these two bills were going throug h Congress separately. However, when the Senate Democrats lost their filibuster proof majority, the two bills became one in order to send them through The Budget Reconciliation Process.

Under the act, the federal government will stop subsidizing student loans made through private lenders. Instead colleges will have to process loans through the Federal Direct Loan Program. In part, this change is supposed to save $68 billion dollars, increase the Pell grant limits, provide $2.5 billion to Texas colleges and $2 billion to community colleges.
"For several decades we really had financial foolishness here where big banks received billions of dollars in tax payer dollars and subsidies, but the government provided all the finances and continued to bear all the risk. The middleman in all this got away with a significant amount of profits," Doggett said.

Other provisions include simplifying the application process. Doggett said that this is being accomplished by shortening the application process and letting people bypass some of the financial information because this information is already known by the government. He added that there is still work going on between the various bureaucracies.

"I definitely think it's a good thing," ACC student Giovanni Sanchez said. "I had a situation where I had a lender fall out on me, and I had to go through a bunch of steps to get it resolved."

Not everyone has been in favor of the bill.

"It seems like something that was tacked on because it would have been unpopular," ACC student Cody Smith said.

Despite any opposition, parts of the act are already going in to effect. Officially, colleges have to use the Federal Direct Loan Program by July 1. However, ACC has gotten an early start. The school officially switched to direct lending on April 1, but according to Velda Jackson, ACC Student Loan Coordinator, the college started 3 to 4 months.

The financial aid office has been working to notify students by sending out letters to current aid recipients and through the website, but many are still uninformed of these changes.

"I think Spring Break and everything may have delayed the process, but in the next day or two they will know because that's how the summer process is going to happen this year," said Jackson.

Current numbers provided by the financial aid process show an overall increase in student financial aid. In 2008-2009, over 13,000 students were awarded financial aid. That has already risen to over 18,000 students for the 2009-2010 year. However, the current year's numbers only go through Feb. 26 since the year hasn't ended yet.

Over $32 million has already been distributed to students through the Pell Grant, up from $18 million last year.

"The system is going to bog down. The key is [students] need to apply as early as possible," Jason Briseno, Rio Grande Financial Aid Campus Supervisor, said in response to these increases.

In order to apply for financial aid, students will need to fill out the FAFSA.  They will also need to complete entrance loan counseling and sign a new Master Promissory Note.

Links to these steps and additional information are available at austincc.edu/support/financialaid. Students can also go into any of the financial aid offices open at each campus.