Direct Loan participation successful, financial aid still a priority

University Park, Pa. — Penn State's decision earlier in 2008 to participate in the Federal Direct Loan Program has been successful, offering efficient and stable access to financial aid during an uncertain state of the national economy, explained Anna Griswold, assistant vice president for Undergraduate Education and executive director for Student Aid, as part of a panel presentation Friday, Nov. 21, to the University's Board of Trustees.

Griswold outlined the reasons for Penn State's entry into the Federal Direct Loan Program and the current status of student loans. She noted that the University's decision in March 2008 to participate in the Federal Direct Loan Program was prudent, especially given the decision of Penn State's primary lender, PHEAA, to leave the student loan program as well as added downturns in the national economy during summer and fall 2008. Although the compressed transition required considerable added effort by dozens of staff in several departments, it has resulted in stable access to funds for thousands of Penn State students and families.

"Penn State's migration into the direct lending program marked the highest loan-volume school for the Department of Education in recent years. Penn State ranks in the top 10 schools for total loan volume for the Stafford, student and parent PLUS loan programs," Griswold noted. Total anticipated loan disbursements to the University's students through these programs will approach $500 million by the end of the 2008-2009 academic year.

Similarly, federal and state grant programs are vital sources of funding for students, and primary among those are the federal Pell Grant, the Pennsylvania State Grant and Mathematics Access to Retain Talent Grant. Penn State ranks 11th among major flagship institutions for Pell Grant recipients and first nationally in Pell Grant students who receive the academic competitiveness grant. This year the federal Pell Grant's value increased by $421, which helps offset a $530 decrease in the State Grant's value. During this year the University expects to disburse from these programs more than $100 million to students.

Of continued concern is the availability and affordability of private education loans, which students and their parents often use to supplement their college payment options. Interest rates continue to rise and qualifying credit criteria has become increasingly stringent, said Griswold.

"The lenders listed on the Office of Student Aid web site reflect those reputable lenders who currently offer some of the best interest rates on these loans. To date, our students have not been negatively impacted by the more limited availability of these loans," Griswold said. "However, the interest rates on some of the private loans students are securing are no better than rates on unsecured credit cards, with some interest rates between 12 percent and 16 percent."

Griswold concluded her remarks by noting that the state of the national economy will continue to factor into students' college and financing choices.