Student Loan Reform Means Changes For VSAC

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(Host) The new health care reform bill will mean a change for Vermont students seeking loans for higher education.

That’s because the legislation includes an overhaul of the national student loan program. And, as VPR’s Bob Kinzel reports, the change will have a direct impact on VSAC – the Vermont Student Assistance Corporation.

(Vickers ) "In today’s political climate this is the best deal one could get and it means VSAC will be around for another day to provide services to Vermonters."

(Kinzel) That’s VSAC executive director Don Vickers discussing the big changes his organization will now face when the health care reform bill is signed into law.

Under the new bill, all student loans will be issued by the federal government. 

Currently, many of these loans are made available through private banks that charge fees for the loans.

The state’s Congressional delegation worked out a compromise that will allow VSAC to continue to service its existing 110,000 student loans.   VSAC will also be able to administer up to 100,000 new Vermont loans issued in the future by the federal government. 

But VSAC director Vickers says his organization will no longer be allowed to act like a bank and originate the student loans and that means less revenue for VSAC:

(Vickers) "Today we raise the capital, we originate the loans and we service the loans. With the passage of the legislation the loans will all be made by the federal government. But it provides for organizations like VSAC to service the loans that will be made by the federal government in Vermont."

(Kinzel) VSAC employs roughly 350 people. Vickers says he hopes to avoid any job layoffs when these changes are implemented:

(Vickers) "However the level of service that’s required is much different under the contract with the Department of Education. It’s less people intensive and more technology intensive.

(Kinzel) Senator Bernie Sanders is a member of the Senate Education committee. He says Vermont was in a unique position because the state’s major student loan lender – VSAC – is a non profit organization:

(Sanders) "We appreciated very much the very fine work that VSAC has done for Vermont families over the years and we wanted to make sure that they will be able to continue to do that work. At the same time we wanted to make sure that families and students in Vermont and across this country would see an increase in the Pell grants and more students would be able to get Pell grants. And that’s what’s happened, so I think what we managed to do is capture the best of both worlds."

(Kinzel) Congressman Peter Welch says the compromise means that a lot more money will be available to Vermont students because private banks, and their fees, have been eliminated from the program:

(Welch) "It’s going to be the largest increase in the student lending program in the history of the student lending program over the next ten years. It’s an additional $44 million that goes to Vermont."

(Kinzel) If the Senate passes the health care reconciliation bill later this week, the new changes to the student loan program will go into effect for the fall semester of 2010.

For VPR News, I’m Bob Kinzel in Montpelier.

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