MSU shifts recommendation to direct federal loans in wake of state changes

Contact: Rick Shipman, Office of Financial Aid: (517) 353-5940, shipmanr@msu.edu; or Kent Cassella: University Relations: (517) 355-2281, cassella@ur.msu.edu

April 23, 2008

EAST LANSING, Mich. — Michigan State University is once again directing its students and parents seeking federal loans to the Federal Direct Student Loan Program for fall semester 2008 in the wake of the demise of a state of Michigan program.

Since 2003, MSU had recommended the state’s Michigan Students First Program, which provided deep borrower discounts. However, turmoil in the national credit markets prompted the state this month to discontinue the program. The credit crisis also has clouded student loans from private banks with uncertainty.

MSU administrators reviewed many alternatives to Michigan Students First and concluded that borrowing directly from the federal government’s student aid program is the best choice to provide an uninterrupted flow of federal loan dollars to those needing to borrow to pay for educational expenses.

“We are working hard to identify sources for student loans that can provide stability and predictability to our families with a minimum of administrative overhead,” said Rick Shipman, director of financial aid. “Borrowing directly from the federal government was the best available program until 2003, and it is again the best solution, consistent with our commitment to ensuring a high-quality, cost-effective, dependable loan program for MSU families.”

The Federal Direct Student Loan Program offers several features that will make the transition back to that program relatively easy for MSU, Shipman said.The loan application is the Free Application for Federal Student Aid which most families already complete when seeking financial assistance.The approval process is fully automated, and funds are delivered to the school as part of the funds delivery system used for other federal aid programs. Finally, there is a single point of contact for schools and students which streamlines the customer service process.

“We believe that parents and students will find the program very easy to work with,” Shipman said. “We will monitor loan programs in the future and continue to offer our families the best available borrowing options.”

More than 21,000 MSU students and almost 5,000 parents borrowed about $260 million through the federal loan programs for 2006-07.

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