The student loan industry has been experiencing some shifts lately with Congress’ passing of The College Cost Reduction and Access Act. Sure, it sounds wonderful, but the waves it has been creating for lenders and students show the act is not living up to its name.
The act reallocates funds from the federal loan market to increase money going toward direct-lending programs and grants. So far, this has left mid-sized lending companies scrambling for funds, causing some to drop their federal lending programs altogether.
Since then, students have looked to credit unions for financial assistance. But administrators are saying that credit unions might be the next to go.
Allison Griffin, spokeswoman for Texas Credit Union League, said most loans are federally guaranteed, which means the government will pay back a certain rate of money students owe to lenders. Those rates, although set for for-profit and nonprofit lenders, were not established for credit unions.
Although credit unions are lobbying for rates to be set, this problem should not exist in the first place.
It seems that the act with good intentions was passed in haste. The negative impact it is having on students and lenders is unnecessary, especially when the act was intended to help, not hurt, the increasing price of an education.
Putting credit unions, an outlet many students go to for financial assistance, in a shaky position is inconvenient and unfair.
Legislators in Washington need to take a long, hard look at the effects of the act they passed. Whether edits are needed or it should be canned altogether, it is clear that a change is needed.