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UW-Oshkosh moves to direct lending on student loans
OSHKOSH, Wis. (2/19/10)--The University of Wisconsin-Oshkosh announced this week it is changing its federal student loan process by requiring students borrow from the federal government--not from banks or credit unions. The new policy will begin this summer. In a press release, the university said the move is prompted by its joining "thousands of other U.S. higher education institutions in the Federal Direct Student Loan Program." Chancellor Richard H. Wells said the university compared two student loan programs, the Federal Family Educational Loan Program and the Federal Direct Student Loan Program, before its decision. "Many banks are no longer servicing student loans or are restricting who will receive loans," he said. The program "ensures funds are available for students," he added, saying that with direct lending, funding is secure, fees and interest rates are more favorable and processing is streamlined. As a result of the change, UW-Oshkosh students with federal Stafford, Grad PLUS and Parent PLUS loans will borrow funds from the federal government instead of from multiple private banks and credit unions. Students participate in the program by filling out a Free Application for Federal Student Aid (FAFSA), signing an electronic master promissory note and participating in online entrance counseling. Changes in federal student loan processes the past three years have prompted some credit unions to get out of the student loan business. Others have joined private student loan networks to fill the gaps between federal student loans and students' needs. Two companies that have proved popular with credit unions entering the private student loan market are Fynanz Inc., which powers cuStudentLoans.org, a private lending marketplace, and Credit Union Student Choice, a credit union service organization. Fynanz currently serves 30 credit unions in its turnkey program, and Credit Union Student Choice announced its 100th credit union client this week.
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