Student loans will no longer be handled by banks after June 30, according to a press release from Arvest Bank. Yancey Spivey of Arvest Bank said the legislation was included in the healthcare bill. The congressional decision eliminates the Federal Family Education Loan Program.
“With this new legislation, banks will no longer be able to originate new federally-insured student loans after June 30, 2010,” the release said. “The Federal Family Education Loan Program is the largest federal source of student loans in the United States and Arvest is one of the largest originators of student loans in Oklahoma.”
Spivey of Arvest Bank’s Ada branch said the bank’s administration has not yet discussed how the decision would affect Arvest’s profitability but said student loans are a significant part of the bank’s business.
“It makes up a large percentage of our portfolio,” he said.
“I’m surprised that this legislation was tied to the health bill,” he said. “That’s the most disappointing thing about our American political system, in my opinion. How do student education loans get tied in with our health bill?”
Zach Walters of Citizens Bank said the bill would have no effect on Citizens.
“We’re not really tied in with the student loan program. As far as we’re concerned, it won’t really have an effect on us,” he said. Vickie Patton of Vision Bank said the decision would not affect Vision Bank, either.
“Vision Bank has not been involved in student loans for quite some time,” she said.
Marilyn Schwarz, ECU’s director of financial aid, said the change shouldn’t affect students very much.
“The major impact is the students are going to have to do a new master promissory note because it’s a new lender for them,” Schwarz said. “From the standpoint of how that loan looks to them, the amounts are the same, the interest rates are the same so this program looks identical to them in that respect. The difference will be in how the school certifies them and receives the funds.”
She said the bill would have an effect on her office’s workload, however.
“It will put some additional workload onto the financial aid offices. Some of the work that was done by our lender partners in the FFELP, we have to do in this program. For us, it does create quite a bit of difference,” Schwarz said. “From the students’ perspective, it’s not going to be a whole lot different.”
Representatives for Landmark Bank and Tinker Federal Credit Union could not be reached by press time.