The Trump administration reversed previous guidance on the Federal Family Education Loan Program (FFELP) last Thursday.
The Obama administration put forth the guidance and stopped guarantor agencies from charging high fees on loan payments for students.
Students had to enter into a rehabilitation payment program within two months of defaulting on their loan to not be charged fees. According to the U.S. Department of Education, more than four million people who have FFELP loans are currently in default.
FFELP loans were replaced with the Direct Loan program in 2010 with the passing of the Health Care and Education Reconciliation Act. Some students who received the loans are still working on paying them off.
Financial Aid Director for Truman State Kathy Elsea said that the department stresses the importance of loan repayment. She said problems with payment arise when students don’t understand how loans work.
“I think it’s easier to get the loans,” said Elsea. “They don’t really budget and realize about the repayment. I think some student borrow more than what they need because it’s easier at the time.”
Elsea said that graduates can still call the financial aid office to ask for guidance on their loans, although most deal with their loan holders directly.
She said fear over student loan payments does affect some students’ decisions to attend college.
“They hear the stories, or maybe know people personally who have gotten into debt,” said Elsea. “With the high cost of education, people don’t always have the luxury to be taking out loans to do something like that.”
The federal government gave Missouri students over $2 billion through Title IV federal funding in 2010, which largely included FFELP loans.
The Missouri Department of Higher Education does not have specific data on how many students in Missouri are still working to pay off their FFELP loans.