Students at Michigan universities won’t be receiving student loans through the Federal Family Education Loan Program in the foreseeable future because it has become “effectively impossible” for the program to support itself, officials say.

The state officially suspended FFELP, a program that buys loans from private lenders and resells them to students.

While the University doesn’t use FFELP, it offers loans through the Federal Direct Loan Program, which gives its loans and subsidies directly from the federal government, and will not be directly affected. Wayne State, Michigan State and Eastern Michigan Universities used FFELP, but will offer their students loans through FDLP in the fall.

Twenty-eight public institutions and 36 private institutions gave loans through the FFELP last year. Loans through the FFELP at MSU alone totaled $260 million between 2006 and 2007. At Wayne State, FFELP constituted $155 of the $244 million in student aid during the same period, according to the school’s website.

Margaret Rodriguez, the senior associate director in the Office of Financial Aid at the University, said the FDLP will be able to absorb the cost of loaning to students who would have otherwise used the FFELP.

She said the FDLP can handle an immediate 20-percent increase in loan volume and that further resources are available if necessary.

“There are a lot of articles in the paper that say there’s a student loan crisis,” Rodriguez said. “I don’t think there’s a crisis.”

Francine Wunder, the director of corporate and public affairs at Wayne State, agreed.

“There are still lots of loans out there,” she said.

Wunder said the transfer to FDLP is “actually a very, very good thing” for students because it offers a simpler way for students to get federal loans.

She called the direct loan program a “more stable, reliable mechanism” because students don’t have to work with private lenders.

“Given the current market conditions and the difficulties lenders are having, we want to make sure that our students have access to the funds they need to get loans,” she said.

Wunder said the loan program withdrawal was more of an indicator of a failing economy than a cause for student alarm. “It’s affecting a lot of areas, not just home mortgages and not just student loans, but credit in general,” she said.

Spokesman for the Michigan Department of Treasury Terry Stanton said that enrollment at Michigan universities should not be adversely affected, but that some students may have to work harder to find private lenders if they don’t want to go through the FDLP.

“We don’t believe that students will be forced to quit their higher education efforts,” he said.

Leave a comment

Your email address will not be published.