Well, the whole financial market crisis finally struck close to home....very close. I found out yesterday that I've officially been laid off.
Apparently the financial meltdown how affected the market for student loans to such a degree that schools are leaving FFELP (the Federal Family of Education Loan Programs) and joining the Direct Loan program. I'm sure there are many reasons for the fear, most probably due to the complications created when lenders stop offering student loans - the schools are the ones who face the most challenges and complaints when student's loan funds arrive late or don't arrive at all. While the money (and lenders) are there, most financial aid administrators don't like the implications - added work, more questions and significantly more confusion (which, let's face it, isn't something that's ever been needed in financial aid).
I understand the allure of schools shifting to Direct Lending. In the DL (Direct Lending) program, schools are actually able to drawn down funds directly from the federal government. The streamlined approach offers schools consistency of process and the assurance that funds are, and always will be, available.
It is sad to see that the non-profit guaranty agencies that were such an integral part of FFELP are being abandoned out of fear. The educational purpose of guaranty agencies is one that simply doesn't exist (or at least hasn't in the past) in the Department of Education. Strange, eh? Guarantors have typically been able not only to provide a valuable resource for student borrowers facing issues repaying their loans, but also training for financial aid administrators to help them better their processes, their compliance and themselves.
Sadly, the only counterpart offered by the Department of Education is their annual EAC conference. Schools are now going to be reliant on their state, regional and national professional associations to do more to keep them abreast of the changes that inevitably rain down when they can least afford it.
I view the announcement that my former employer was cutting positions only as the starting point for a trend that is going to continue for the indefinite future. With the economy in shambles, lenders unwilling to participate in the federal student loan program and guaranty agencies facing struggles to meet their operating expenses, the future of the FFEL Program is definitely looking bleak. The pall cast by slow demise of FFEL is absolutely going to impact the entire financial aid community, administrators and students alike.
Administrators will gradually see less options for professional development, process improvement and education on compliance and regulatory issues that arise. Increasingly their state associations (which are suffering already as a result of less support from lenders and guarantors) are going to have reinvent themselves and find some way to meet this increased demand while also doing so with fewer volunteers from their lender and guarantor memebers. Historically, the majority of content provided during conferences was created and presented by members of the lender and guarantor community. Our presentations weren't sales pitches (ok, some were, but not many), they were honest attempts to help financial aid administrators be better professionals and, in turn, help their students be better borrowers.
All students benefited from the lenders and guarantors expertise. They saw improved school processes that impacted every from the student's application for financial assistance to the timeliness of their receipt of funds. Students, whether they knew it or not, were benefitting from years of experience shared among professionals that helped them adapt and anticipate the virtually unlimited number of problems that could arise.
I'm going to miss being part of the industry that gave rise to my professional career. My personal committment to helping students has never wavered and I can honestly say that my last position is one I will sorely miss. I can only hope that someone realizes that implications of following this track without an eye for what is being sacrificed.
Good luck my friends! My thoughts will be with you always!