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The Chronicle of Higher Education
Friday, March 8, 2002

Bush Administration Supports Direct Lending, at Least for Now, Education Official Says


A Bush-administration official said on Thursday that the White House has no plans to dismantle the direct-student-loan program. However, that official -- Jeffrey Andrade, a higher-education adviser at the department -- said he could not guarantee that the administration would continue to support the program when the law that authorizes it expires next year.

During a session on student-loan policy at an Education Department meeting here on student aid, Mr. Andrade told college officials that the administration has no preference for either the direct-loan program or the competing guaranteed-loan program, one over the other. Direct lending is a federal program that since 1994 has provided loans directly to students through their colleges, eliminating the role of banks and guarantee agencies in the process. The program was championed by the Clinton administration, but Republican lawmakers frequently took steps to undermine it, and many direct-loan supporters have predicted that a Republican administration would kill it.

"What we have tried to do is be evenhanded, and I think we've promoted the idea that what program you decide to be in is the school's choice," he said. "And we're going to do everything we can to make the direct-loan program as efficient as possible to meet your needs."

When asked after the session whether the administration would remain supportive of direct lending next year when Congress begins work on legislation to renew the Higher Education Act, which governs the federal student-aid programs, Mr. Andrade said it was too early to say. "That's a decision the president will have to make," he said.

Such sentiments did little to ease the concerns of supporters of the direct-loan program. For example, they were upset by a decision that Education Department made earlier this year to scrap its annual direct-loan conference and replace it with this conference on student aid, which is open to all financial-aid administrators.

Department officials, however, say they believe that it is inappropriate for the agency to devote a conference to one federal-loan program and not the other. On Wednesday, in welcoming student-aid administrators to the conference, William D. Hansen, deputy secretary of education, said, "Today, we are here together as one community with one purpose, which is further evidence that we are moving away from the war between the direct- and guaranteed-loan programs."

But by eliminating the annual direct-loan conference, the department is putting aid administrators in direct lending at a disadvantage, supporters of the program say. Lenders and student-loan-guarantee agencies hold annual conferences to keep their clients up to date on their latest services and to help them with any problems they are having with their products. At the annual direct-loan conferences, the department provided similar services to aid administrators at colleges in direct lending.

"At those conferences, we had direct-lending schools together in the same room, and we were talking about ways to improve service to our students, and how best to implement new processes, and we were learning from one another," said Rick Eddington-Shipman, director of financial aid at Michigan State University. "There are no sessions like that here."

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