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Aaron Beswick, a SESP senior graduating this winter, barely has time to celebrate his graduation before he has to worry about repaying $32,000 in student loans.
But new federal government initiatives plan to ease burdens like Beswick’s with direct loans in which students borrow money straight from the government rather than bank lenders. The Income Based Repayment Plan allows for monthly payments based on a family’s individual income. Students eligible for this plan include those whose loan debt is high in relation to family income and size, and who participate in the Federal Family Education Loan or the Direct Loan, according to the Federal Student Aid Web site.
For students like Beswick, who plans to be a social worker, the program can provide benefits with its 10-year public service loan forgiveness. In this area of Income Based Repayment, a student who works in public service for 10 years may have his or her loan canceled if all monthly payments are made.
“It sounds like a wonderful and beautiful option,” Beswick said. “The one thing that makes it sound scary is not missing a payment. I’m not sure that the work I want to do is well-paying.”
Brian Drabik, associate director of Northwestern’s undergraduate financial aid office, wrote in an e-mail that students should only apply for the Income Based Repayment Plan when encountering problems with payment because paying loans faster doesn’t acquire as much interest.
The federal government is currently in the process of passing direct-lending legislation, which may remove private banks from federal lending programs. The House of Representatives has passed this legislation, and universities including NU are waiting for the Senate decision.
Weinberg sophomore Bill Russell said he received $45,000 in a subsidized Stafford Loan and thinks direct loans will make the process easier.
“It’s a good idea because I know that when I came here I had to decide who I wanted to loan money from, I was just a high schooler and didn’t really know the difference between all the different plans,” he said. “But at the same time, I would be a little bit skeptical because if there aren’t any competitors, it wouldn’t be as good.”
Michael Mills, assistant provost for university enrollment, said NU is taking steps to prepare for direct lending, which can provide more help for students and their families.
“(The legislation) will increase the Pell Grant amount, and it will make it easier for these families to be able to afford Northwestern,” he said.
“I think that’s great.”
Currently, Pell Grants give $5,350 to each student, but the new plan would increase the amount to $6,900 by 2019.
Mills said students and their families would not notice a change in the financial process because the new plan only varies in where the money comes from.
Pell Grants give money for postsecondary education based upon the needs of a family and are usually awarded to those who make $40,000 or less per year.
Mills said NU has encouraged more students from low-income families to apply by writing letters and corresponding with students. Last year, 6.5 percent of NU freshmen received the Pell Grant, but this year the number almost doubled to just under 12 percent.
Students apply for financial aid for NU through an organization called QuestBridge which matches low-income students who want to attend top colleges with financial opportunities. About 30 other universities work with QuestBridge, including Yale and Stanford Universities and the University of Chicago .
“We accept the QuestBridge application knowing that 90 percent of the kids applying through it are going to qualify,” Mills said. “I think that has helped to identify low-income families with Northwestern.”
