David M. Granger
DIRECT LOAN PROGRAM CHANGES WILL HELP AU STUDENTS SAVE
AUBURN -- About 15,000 Auburn University students receiving Direct Loans for their college expenses may be eligible for savings under recent changes to the program starting in the fall, says Kaye Storey, director of student financial aid at AU.
Storey says the largest savings for the students will be realized through a 1 percent reduction in the Direct Loan origination fee.
"That's definitely where the greatest savings will be," she said. "So far this year, we have paid out $43.69 million in student loans. If you figure the savings just from that amount, it would be $436,933 over approximately 15,000 students."
Other changes in the law will allow students to save .25 percent for paying off loans electronically and 0.6 percent for consolidating loans from the government with those from other lenders while they are in school or during the grace period before they enter loan repayment.
Storey said her office just received detailed information on the changes to the program and will work to see that all AU students are aware of savings for which they may be eligible.
"We will see that the word of these changes and what they can save our students is well disseminated," she said.
Nationally, more than 2 million students will be eligible to save an average of $631 on their direct student loans, according to the U.S. Department of Education. Each student will save an estimated $100 on the origination fee, $157 for the electronic debit reduction and $374 after consolidation.
The newly announced discounts are similar to those now offered to students by lenders under the Federal Family Education Loan program and will help bring parity to the two programs.
Under the Direct Loan program, students borrow money for college and other postsecondary education directly from the federal government through their schools. Under the FFEL program, students borrow through banks and other third-party lenders, which, in turn, receives guarantees against default from the federal government. The Direct Loan program began in the 1994-95 school year and now accounts for about one-third of all student loans.
CONTACT: Storey, 334-844-6099.