UA getting jump on potential student loan headaches
Posted on Thursday, June 26, 2008
Troubles in the nationwide student-loan market won’t keep Arkansas students from enrolling in college this fall, but will create paperwork headaches for some, higher education officials say.
The University of Arkansas at Fayetteville is drafting three different letters this week that it will send to roughly 5, 600 student borrowers as early as Friday, said Kattie Wing, the campus’s financial aid director.
About 1, 300 of those students have their federal loans processed through Bank of America, which announced this spring it would no longer directly service federal loans — Stafford, Parent PLUS and Graduate PLUS loans.
About 1, 000 students at Arkansas State University will be affected by the Bank of America change, said Rick Stripling, vice chancellor for student affairs.
Officials at both universities said there’s no reason for students to panic — just a need to take action.
“The bottom line for the students is: The money is there, they just have to do some more paperwork to get it,” said UA spokesman Steve Voorhies. “If they don’t, there could be some confusion on the first day of classes.” At the Fayetteville campus, the non-Bank of America customers who will get university letters either have lenders that are leaving the federal student loan industry, or their lenders have made a change in the companies with which they outsource billing and payment services, Wing said.
She estimates that just under 2, 000 students — the Bank of America customers and those who have departing lenders — will need to do the paperwork to ensure their loans go through smoothly after the fall semester begins. The campus enrolled 18, 648 last fall.
“With all of these students,” Wing said, “there is a very good potential they are going to have split-servicing.” Split-servicing is when a student gets bills from two different companies at different times of the month. In most cases, loan payments wouldn’t rise, but borrowers can take steps to keep their payment consolidated.
On June 1, Bank of America began disbursing and servicing student loans through Great Lakes Higher Education Learning Corp.
Students who want to stay with the bank under this new arrangement must sign a new master promissory note for each type of federal loan they have. Other options include choosing a new lender and signing a new promissory note, both of which can be done electronically.
“The student can always use whatever lender they want,” Wing said. “If they want to avoid split-servicing, they have an option for that that we’re educating them about.” The students who get merely a change in billing company don’t have to do anything, she said, but the Fayetteville campus is sending them a letter, too, so they’ll know why their invoice bears an unfamiliar name.
At ASU, which last fall had an enrollment of 10, 869, the change involving Bank of America has had the most impact on student loans, Stripling said. About 7, 000 of its students get financial aid, which includes loans, grants and scholarships.
He called the paperwork needed to switch students to Great Lakes servicing “pretty cumbersome,” adding that the change is more about process than loan availability.
It wasn’t clear how many Arkansas students will be affected. The Arkansas Department of Higher Education doesn’t track such statistics, spokesman Dale Ellis said.
UA and ASU officials said that while it will be easier on students if they act sooner, there’s no danger of their fall enrollment being disrupted if they wait. But if they don’t take care of the loan changes they could not continue through to the spring 2009 semester, and Wing added they would incur some late charges.
“We don’t see this as a deterrent for enrollment,” Stripling said. “We process financial aid all throughout the semester.”
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