[Congressional Record Volume 141, Number 173 (Friday, November 3, 1995)]
[Senate]
[Pages S16673-S16674]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  LOAN PLAN GOOD FOR SCHOOLS, STUDENTS

 Mr. SIMON. Mr. President, the interim chancellor of the 
University of Illinois at Chicago, David C. Broski, had a letter to the 
editor in the Chicago Tribune about direct lending.
  Because our colleagues are trying to figure out right now what to do 
on direct lending, I thought they would be interested in seeing the 
perspective of a college administrator.
  I ask that the letter to the editor be printed in the Record.
  The letter to the editor follows:

                  Loan Plan Good for Schools, Students

       Chicago.--I couldn't agree more with the Tribune's 
     editorial opposing the changes in the Federal Direct Loan 
     Program that have been suggested by the banking industry 
     (``Cooking the books on student loans,'' Sept. 11).
       The program received a big boost last year when rules were 
     changed to allow the government to lend directly to students 
     at some universities, without running the money through 
     banks. But it could lose all it gained if Congress succumbs 
     to pressure from banking interests and goes back to the old 
     system. The debate in Washington has centered on arcane--and 
     conflicting--reports from accountants. Some say the new 
     program is more costly; others say it's not.
       I'm not qualified to analyze the accountants' reports 
     (though I don't understand how eliminating a middleman can 
     cost you money). But I do know that the new program has 
     benefited the people it was supposed to help: the students 
     and the universities.
       At the University of Illinois at Chicago, the direct-
     lending program has cut the average processing time for a 
     student loan from seven weeks to three. And it has saved time 
     and effort for our financial-aid staff because they don't 
     have to deal with a multiplicity of banks. As a result, 
     students get their 

[[Page S 16674]]
     money sooner and UIC saves money in reduced staff time and processing 
     costs. We expect to process more than $40 million in direct 
     student loans this academic year. At our sister campus in 
     Urbana-Champaign, direct lending resulted in 2,500 more 
     students receiving their loan proceeds at the beginning of 
     the fall semester, compared with the previous year.
       A Harvard University official echoed the sentiments of our 
     financial-aid people when he said, ``Now that we're no longer 
     caught up in the paper chase from many lending institutions 
     and guarantee agencies, we have more time to deal with real 
     issues.''
       There's another good thing about the direct lending program 
     that was not mentioned in your editorial. It offers a greater 
     variety of repayment options. In addition to the standard 
     repayment plan spread out over 5 to 10 years, students can 
     choose: an extended repayment period with lower monthly 
     payments, a plan in which payments increase over time, a plan 
     with payments pegged to the borrower's income.
       The advantage of these options, of course, is that they 
     give college graduates the freedom to take lower-paying but 
     socially useful jobs and still repay their student loans.
       Federally guaranteed bank loans haven't been abolished. In 
     fact, they make up more than half of the $25 billion in 
     annual student loans. But UIC, like most of the state 
     universities in Illinois, has switched to direct lending--
     with excellent results. The program is good for our students 
     and good for Illinois taxpayers, and it shouldn't be 
     abolished or weakened.--David C. Broski.

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