Banks to regulate loans

IU administrative services will no longer shoulder the expense of running two financial aid systems that provide student loans. \nThe University plans to drop one service completely, because maintaining the two systems would require an up-front investment of $1 million, according to the Student Information Systems Steering Committee.\nBefore the federal government's launch of the direct lending program in 1994, all seven IU campuses used the Family Federal Education Loan Program, FFELP. Since that time, the University has supported both systems.\nPlans announced at a Dec. 7 board of trustees meeting call for the change to a single financial aid system, which supplies some $120 million in student loans, according to Bill Ehrich, associate director for client services for the Office for Student Financial Assistance. \nUnder this plan, the University would save money by operating only one system. The annual cost of maintaining both systems would be approximately $500,000 per year, according to a University statement.\nTrustee Stephen Backer said it would be difficult to determine where any money saved would be reallocated.\n"With academics as our main focus, it would most likely be placed within that area," Backer said. "We're not going to plow this money into some obscure area, especially with the current budget constraints."\nAccording to a University statement, the savings involved will allow IU to allocate more funds toward investments in IU's primary academic missions of teaching and learning, research and service.\nNo current IU students will be affected by the change, and those students receiving financial aid through direct lending will continue to receive funding. Over the course of the next three years, IU will begin using the PeopleSoft Financial Aid Module, but the change will not occur before fall 2004. \nEhrich said substantial research was conducted in preparation for the switch. \n"Running one system is just more cost efficient," Ehrich said. \nHe emphasized the change would not affect the amount of financial aid students receive.\n"The new bank loan system is nothing like the previous one," he said. "The inception of direct lending revolutionized the system the banks were using. Incoming students in the fall of 2004 can expect the same amount of money as in the past -- it's just coming from a different source."\nSophomore Audrey Comparet said she has no qualms with the current status of financial aid.\n"I have no complaints; I'm happy with all the loans I've received," Comparet said. "I just hope if (the University) is able to save any money, that it would give it back to the students"