Colleges Directing Efforts to Federal Funded Student Loans

The vast majority of colleges have begun to prepare themselves for what the Obama administration considers a likely transition of all student lending to the federal direct student loan program -- but a solid majority of lending is still being made through the competing lender-based guaranteed loan program, according to an analysis of federal data by Student Lending Analytics. The Education Department reported this week that 96 percent of colleges had taken at least some crucial steps toward being able to issue loans through the government-run program, to which legislation passed by the House and pending in the Senate would shift all federal student loan origination. But with the Student Aid and Fiscal Responsibility Act seemingly stalled behind health care on Congress's agenda, and the July 1 deadline for institutions to switch looming, the Student Lending Analytics data suggest that many colleges are hedging their bets. On a related note, Rep. Timothy Bishop, a New York Democrat who supports the president's legislation, said in comments before the Council for Higher Education Accreditation Thursday that it was "likely" that Congress would delay until 2011-12 implementation of major changes that the SAFRA bill would make in the Perkins Loan Program.