March 11, 2008
Penn State becomes a Direct Loan school
Penn State is leaving the FFELP program. PHEAA’s inability to issue new loans is part of it.
Here’s what Penn State had to say in their press release:
In an effort to provide its students with a stable and predictable source of funding for their federal student loans, Penn State intends to become a direct student loan participant, with money coming from the U.S. Department of Education. The initiative will give the 44,000-plus Penn State students who currently have federal loans a secure source of funding along with a streamlined process for
Recent reports of instability in the national credit markets — initially caused by problems with subprime mortgages — have been compounded by new concerns over capital and bond markets. The turmoil has placed a burden on federal student loan lenders and raised concerns about the accessibility of federal student loan funding.
A little more than a week ago, the Pennsylvania Higher Education Assistance Agency (PHEAA) announced that it will no longer serve as a lender for federal Stafford Loans, a move that directly affects 40,800 Penn State students who use PHEAA as their lender. Some lenders of private student loans also are cutting back on loan services, although Penn State will continue to assist students with suggestions for private loan providers from which to choose.