The Student Loan Relief Organization's Supports President Obama's Plan for Federal Student Loans
The Student Loan Relief Organization has pledged its support for President Obama's plans to move the federal student loan program towards being completely through the Direct Loan Program and put an end to the FFEL Program. This plan, if implemented, will have a substantial effect on the student loan market. It may negatively impact the business of the Student Loan Relief Organization (SLRO), but it ultimately accomplishes the same goal of helping troubled student loan borrowers.
Voorhees, NJ (PRWEB) May 5, 2009 -- The Student Loan Relief Organization believes the student loan crisis in our country is far beyond financial aid and the rising costs of college, but the serious lack of attention being paid to the privatization of this industry is at the root of the problem. Private banks disburse federal loans to students through the FFEL or Federal Family Education Loan Program.
The new Obama administration recently announced its plan to do away with the FFEL program and replace it with its government counterpart, the Direct Loan program. This is a necessary step to protect consumers in this industry from private entities servicing loans in their best interest rather than the customer. This is of no surprise to anyone in Washington as Deanne Loonin of the National Consumer Law Center states that "In 2007, Congress passed legislation that would significantly cut lender subsidies...the bill also reduces, from 23% to 16% the amount of money that guaranty agencies can keep from the money they recover from borrowers who default." Agencies involved in the FFEL program are known to abuse their power and often do more harm than good to the average borrower, especially those in default.
Upon default, a 25% collection fee is assessed to the balance by the guarantor. Then the guaranty agencies look to use collection tactics such as the administrative wage garnishment program and tax refund offset to recoup their loss. With all of these tools available for student loans that are not present for standard unsecured debt, private agencies can and have been taking advantage of the system and ultimately, the borrower. These agencies can force a defaulted borrower into pursuing options that are not favorable and only benefit their private institution(s).
According to SLRO President Tony Rahil, "Private agencies and the lack of regulation in the FFEL program only add to the confusion surrounding federal student loans and often do more of a disservice to the borrower than anything else. This move to Direct Loans may not necessarily help SLRO from a business standpoint, but it will help the troubled borrower and they are the reason why I started this company. The move will take much of the ambiguity out of the student loan industry."
Getting private entities out of the equation will minimize or stop government subsidies for private lenders in the FFEL program that eventually cost the taxpayer. California Democratic Representative George Miller, Chairman of the House Education Committee calls the President's proposal "a solid plan to make federal student loans more reliable, while saving taxpayers billions of dollars." SLRO fully supports this aspect of President Obama's agenda for changing the current federal student aid system.
For additional information please visit our website at www.slro.net.
The Student Loan Relief Organization has been providing troubles borrowers with consulting services to help them manage their situation(s) for over four years. Specializing in default resolution, SLRO is in constant contact with the Department of Education and guarantors. Founder and President Tony Rahil is a graduate of Brown University with a B.A. in Business Economics and has been working in the financial services industry for over eight years.
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