Students at the University of the District of Columbia who depend on federal student loans and other financial aid to cover their school and living expenses are still waiting for their fall-semester money — 14 days overdue and counting.
The school is two weeks late in printing financial aid disbursement checks for its approximately 2,500 students who rely on federal financial aid, The Washington Post reported yesterday (“2,500 UDC Students Don’t Have Their Federal Aid Checks,” Oct. 14, 2010).
No disbursement checks had been issued at all until Wednesday, when UDC began printing them in “small batches.”
School Says Student Loan Legislation Behind Financial Aid Delays
UDC spokesman Alan Etter said that the university was caught unprepared for the sweeping changes to the federal student loan program, legislated as part of the Obama administration’s health care overhaul bill, that went into effect on July 1 — changes that Education Secretary Arne Duncan had warned colleges, in a letter sent back in October of last year, to begin implementing in anticipation of the student loan legislation passing (“Colleges Are Pushed to Convert Loan System,” The New York Times, Oct. 26, 2009).
The Student Aid and Fiscal Responsibility Act, included as part of the health care reconciliation bill in March, ended the third-party federal student loan program known as FFELP (Federal Family Education Loan Program) that had allowed private banks and lenders to act as a student loan middleman, issuing government-backed college loans on behalf of the Department of Education.
In FFELP’s place, the bill left the Federal Direct Loan Program, by which federal college loans are issued directly by the Department of Education with no third-party lender involvement.
Schools whose financial aid systems were set up exclusively for FFELP student loan disbursements were required to overhaul their systems in order to accommodate direct student loan disbursements from the government. These systems should have been in place by July 1, when FFELP effectively ceased to exist.
UDC, however, wasn’t ready.
“We didn’t have the technology in place that would allow us to cut a great number of [student loan] checks at the same time,” Etter said. “It was a technological glitch. We should have realized that we couldn’t handle that capacity.”
In exactly the sort of scrambling, slipshod chaos that the student loan industry and FFELP’s supporters had warned would be the result of leaving schools solely in the hands of a government bureaucracy to obtain their federal student loan dollars, UDC is issuing financial aid checks to students piecemeal, as it can.
In a letter to students, the school’s vice president, Valerie Epps, promised that checks for student loans and other funds will be issued “on a daily basis” until all awaiting students have received their financial aid money.
“We hope to have this cleared up within a week,” said Etter. “Maybe a little longer," he added.
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