Editorial: New loan process to simplify financial aid

Does it really matter where college loans come from, as long as you know how to pay them back?

In short, yes, it does. Students should be relieved by Northwestern’s move to direct federal lending-now students will pay back the federal government instead of private banks for Stafford, Parent PLUS and Grad PLUS loans.

Once they suffer the minor inconvenience of signing a new Master Promissory Note, their loans will be easier to understand. Students who have loans from both the federal government and private banks during this transition phase will have the option of consolidating their loans.

In an economic climate where no bank is “too big to fail,” students will know their loans are coming from a stable source. Interest rates will not increase for any students, and they will actually decrease for students on PLUS loans.

The maximum repayment period will be 25 years, so students will not need to fear banks coming after them for the rest of their lives if they make their regular payments.

The move is part of a trend toward deprivatization of student loans being pushed by the Obama administration. Many banks have stopped competing to offer benefits to students, the primary advantage to private backing, and are exiting the business of student loans. NU is staying ahead of the curve by moving to direct lending before it is federally mandated and before there are no private banks left from which students can get loans.