Banks nationwide are being forced out of the federal student loan business and it’ll mean a shift in focus for the Iowa entity that manages billions of dollars in student loans. Legislation signed into law Tuesday by President Obama strips banks of their ability to issue federal student loans, making the U.S. government the primary lender to college students.
Steve McCullough, president and CEO of Iowa Student Loan, says his agency is rolling with the government’s changes. “Iowa Student Loan is actually involved in several programs to help Iowa students and their families pay for college,” McCullough says. “One of them is the government guaranteed student loan program and in the future now, we’ll be playing a different role. Rather than helping Iowa banks and credit unions make those loans, we’ll be providing the customer service work on behalf of the federal government for the loans the federal government will be making directly.”
Critics of the federal action, including Iowa Senator Chuck Grassley, fear the new law will eliminate tens of thousands of bank jobs nationwide. Iowa Student Loan now employs 315 people and McCullough doesn’t see any changes coming in that number. McCullough says, “We don’t see any impact in our employment base at this point because at the same time we may be losing some work with the banks and credit unions, we’ll be gaining some work in terms of customer service work for the federal government.” He says there’s no concern that the change in federal policy will have a negative impact on the number of Iowans who can pursue a higher education.
“Students should still be able to get loans in the same qualification criteria,” McCullough says. “We’re also going to continue to work with the banks and credit unions in the state of Iowa to make sure that private student loans, supplemental student loans, are available for those who can’t get enough money through the federal government programs.” Since Iowa Student Loan was launched in 1979, it’s helped more than 260,000 students pay for college. Today, the organization manages more than $3.7 billion in student loans. McCullough says for all of those clients, there will be no changes as a result of Tuesday’s bill-signing.
“That’s correct, everything will say the same and we’re here to try and help,” McCullough says. “We’re a private non-profit company and we really care about the people we work with and we want to see them succeed in repaying their loans. If anyone’s having difficulties, they shouldn’t hesitate to call us. It should be the first thing that they do.” To learn more, visit “www.studentloan.org”.