Stable as Always, Focused on Borrowers—ASA Reacts to Pres. Obama’s Budget Proposal
You’ve probably heard the news—President Obama has pitched a federal budget that would phase out the Federal Family Education Loan Program (FFELP), which uses a public-private partnership, in favor of the Federal Direct Loan Program (commonly known as Direct Loans or DL).
So what does this mean for ASA? Much more importantly, what does this mean for you and your students?
In the short term: absolutely nothing. ASA is committed to providing a stable loan process for you and your students. The FFELP will stay entirely intact for the 2009–2010 school year, and so will ASA’s services and Wellness programs.
The fate of FFELP beyond the 2009 – 2010 school year is being decided now. The budget that President Obama has proposed must survive a complex and lengthy set of negotiations in Congress. By the time the Congressional budget process concludes, elements surely will be added and removed from the bill—and the shape of the President’s vision for higher education funding may be altered in ways we cannot anticipate.
While we await the final outcome of the budget negotiations, and long beyond that point, ASA will remain deeply committed to our values:
– All student borrowers, regardless of the source of their loans, must be guaranteed the tools to responsibly manage and repay their education debts without falling into delinquency and default.
– Borrowers must have access to timely advice, information, and service over the life of the loan, ensuring they are fully informed of their rights and responsibilities.
– Borrowers benefit particularly from the comprehensive Wellness programs based on ASA’s years of research. This Wellness starts with early awareness about available financial aid (after all, the best form of debt management is grants) and ends with the last loan payment, long after your students have left campus.
These programs are customized and individualized to borrowers, using technology and language that is meaningful to their lives. They teach borrowers vital financial literacy skills and furnish access to all the opportunities and remedies made available to them by Congress. This borrower focus is why ASA has achieved the lowest default rates of any student loan guarantor in the nation and why more than 95% of all loans in our portfolio are being repaid on time.
To learn more about ASA’s views on the future of the higher education system, visit our reform webpage.
And tell us: What do you think about President Obama’s plan? Are you concerned about the impact on your students? We’d love to hear your thoughts!
Posted by Susan Nathan on March 25, 2009 at 10:34 AM EST
I want to take a moment to applaud you for all the hard work you have put into raising your children and seeking an education. Your efforts in the face of adversity are commendable.
Sadly, it is true that most borrowers are not fully informed about their repayment options and do not always understand the terms of their loans. All federal student loans accrue interest, and as a result, the amount you repay will always exceed the amount you borrow. Under the law, federal student loan debt may not be discharged or forgiven in bankruptcy. And if your loans go into default, you may have to pay collection fees that will be added to your original loan balance.
However, borrowers do have options when they encounter adversity. Let’s take a look at some ways you and borrowers like you can manage your loans and avoid default in the first place:
– Choose a repayment plan that works for you. The faster you repay your loans, the less you will pay overall. But if you’re having trouble paying your loans every month, it’s better to lower your payment, at least in the short term, than to miss payments and risk defaulting. Repayment options available to all federal student loan borrowers include graduated repayment, where your payments start small and rise over time; extended repayment, where you pay less for a longer period of time; and repayment linked to your income level.
– Seek out deferment or forbearance when you need to temporarily suspend your loan payments. The most common reasons for deferments and forbearance are economic hardship, enrollment in school at least half-time, and unemployment. Always contact your lender or servicer and be sure you receive written proof that you’ve been granted a deferment or forbearance before you stop making payments.
– Consolidate into the Direct Loan program and take advantage of the income contingent repayment option. Under this repayment option, you will be asked to pay a monthly amount based on your adjusted gross income, your family size, and the amount of your federal loan debt. This repayment amount may go up or down based on your changing income. After 25 years, any unpaid loan debt will be forgiven. However, you may have to pay income tax on the amount forgiven.
– Contact ASA or your guarantor or servicer for 1-on-1 repayment counseling. If your loans are guaranteed by ASA, contact our Borrower Counseling Group at 866.493.5563 or specialist@amsa.com for individualized guidance, advice, and repayment tools. If your loans are not guaranteed by ASA, contact your lender or servicer to speak with a repayment counselor.
– Get free help from an ombudsman. Student loan ombudsmen provide conflict resolution between borrowers, lenders, the federal government, collection agencies, and any other parties involved in a student loan dispute. Contact the Ombudsman at the Department of Education at 877.557.2575.
I hope this information has been helpful. ASA’s mission is to ensure that borrowers receive the education debt management support they need to feel in control of their loans. You can also take a look at our Wellness Working blog to see more helpful tips on loan repayment.
Best,
Susan Nathan
Posted by Susan Nathan on April 02, 2009 at 05:48 PM EST
Single Parent and Education Loans- I so much wanted to better my life when my children were young.
I worked sixteen hours a day in a nursing home from 3p.m to 7am while a boy scout watched my children.I was a single parent. I would come home get them off to school sleep a few hours and take classes. It took a very long time about 8 years. I borrowed $10,000 in student loans. After graduation I had surgery and could not work. But the interest on my student loans accumulated and compounded.The loans were sold for almost double the ammount I borrowed. I filed bankrupcy but not allowed to have any of my student loans forgiven. My children and I just about starved. I have been paying this loan for years and no end in sight. The current balance is almost $18,000 for a $10,000 loan.I have been stuck on paying interest for years I will be paying this well into old age. My regret I should have gone on Welfare instead of working and working and borowing for an education. My advice to any single parents out there "Dont do what I did, hard work and pulling your own weight does not pay.Back then no one informed you if became ill and could not make payments loan would more than double and triple. If you are single parent get all the facts first.
Liz
Posted by liz on March 30, 2009 at 06:17 PM EST
elimination of ffelp is exactly the kind of change americans were looking for when we voted mr. obama president of the usa. the days of becoming rich on the backs of students in this country with loans that are protected by the government are over. asa and companies like you time has come to an end. ffelp will be cut regardless of how much you try to lobby! thank god for a president that will once again do whats right for the people.
Posted by time for change on March 28, 2009 at 09:43 AM EST
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Susan Nathan Vice President, Lender and School Services
Biography
Susan Nathan is Vice President of Lender and School Services at American Student Assistance (ASA)®. She has held this position since October of 2002. Ms. Nathan joined ASA in February 1987 as supervisor of the external program review unit. She has held roles of increasing responsibility in product development, operations, client management and customer service, and marketing. She has been a member of the design teams for a number of ASA’s signature products, including FASTFUND, ASA’s disbursement product, and ASA Direct, ASA’s web processing tool. She was the manager of the business plan for ASA’s major system conversion in 1998.
She is credited with the development of ASA’s nationally recognized client management team. Ms. Nathan oversees the ASA Advisory Council, and is the staff liaison to the Marketing Planning Committee of ASA’s Board of Directors.
Prior to joining ASA, Ms. Nathan was a Financial Aid Officer for Lesley College. She is a graduate of Brown University and a fellow of the Institute for Educational Leadership. She is a member of state, regional and national financial aid associations and is routinely sought by the financial aid community as a professional development trainer.
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