College students may continue to have easier access to federal student loans through July 2010, following a Sept. 17 vote by the U.S. Senate to extend the Ensuring Continued Access to Student Loans Act, first passed in April. Originally set to expire July 2009, the renewal passed by an overwhelming majority because of concerns about the current economic fallout.
The bill is designed to protect students and their families from the current instability of the private lending market and solidify access to student loans.
"With our economy facing some of its darkest days yet, we must take every possible precaution to protect the financial interests of American families -- especially low- and middle-income students and parents who are working incredibly hard to pay for college," said Rep. George Miller, D-Calif., chairman of the House Education and Labor Committee and a sponsor of the bill. He said the bill, if signed by the president, would guard the federal loans of millions of Americans from future crises in the credit market.
The extension of the ECASLA bill, should not, if passed, have a huge impact on Brown financial aid because the University is a direct lender, according to James Tilton, director of financial aid. He said Brown students apply for loans directly to the federal government, without using outside sources.
"We don't have to depend on banks or lending institutions to get federal loans," Tilton said. He added that recent financial aid initiatives, announced in February 2008, have reduced the number of overall loans offered in Brown's aid packages.
Tilton said ECASLA allows Brown students to borrow $2000 more in unsubsidized loans than they could in the past and offers increased flexibility in repaying federal Parent PLUS loans, which Tilton said could be a boon for families struggling in the economic climate.
Overall, the bill "really helped (Brown) parents in a big way," he said, adding that access to federal loans is particularly important now because of severe strains on the private loan market.
Alex Korzec '10, a Massachusetts native, felt the squeeze of the lending market. Korzec thought he had this year's college costs covered when he took a private loan from the Massachusetts Educational Financing Authority, which offers low-interest fixed-rate student loans to over 40,000 students. But on July 29, the non-profit lender announced it would have to stop offering private loans for the 2008-2009 academic year, due to the "disruptions in the capital market."
"My dad called and said 'Hey, guess what? You don't have student loans,'" Korzec said. He searched the internet for new ways to secure funding for his third year at Brown, browsing the Web site of giant student lender Sallie Mae, but had found no definite solution when classes resumed in September.
"It boils down to, 'you need to do this to go to school'," Korzec said. "There's no other way."
Luckily for Korzec, MEFA regained its footing and announced in a Sept. 16 press release that it had raised $400 million through the sale of bonds, meaning the organization would be able to offer loans for the school year. Now, he said, his concern about the economy remains distant and abstract.
"I know the headlines," Korzec said, joking that he had too much work to read the full stories. "One of my first priorities after school is to pay off student loans," he said, but added that he hopes a degree in computer science will give him an edge on the job market.
Other students feel less secure counting on loans given the turn the economy has taken. One girl -- who spoke anonymously because she did not wish to reveal her financial status -- has been on medical leave since last spring and said she will decide whether to return this spring based partly on the status of her financial aid package, which includes student loans. The amount of aid she receives from the University has decreased since her older brother finished college, and she is unsure how the banking crisis will affect her family.
"I don't really understand it very well as far as what it's going to mean," she said. She hadn't heard about the passing or the extension of the ECASLA bill, but said she'd been reading the "main headlines" about the current financial situation.
"I want to talk to my parents about what they think this means for them," she said. She added that her friends have occasionally discussed the drama on Wall Street and in Washington, but said in general, the issues seem removed from campus life -- for now. She would like to move abroad after college.
"I was watching the news the other day, and I thought, 'I have to get out of here!'" she said.