Georgetown University students need not worry about the recent decline in the availability and rates of student loans – at least until they graduate. Georgetown University has just been approved to begin direct lending to students on July 1, 2009.

Although the university has been approved by the Department of Education to become a direct lender, Georgetown has not made a definite decision to actually take part in the program. “University officials are now assessing the operational components necessary to implement the direct lending program,” University Spokesperson Julie Bataille said. “And will make a decision later this year as we continue to monitor the ongoing issues in the credit market.”

Because of the recent devaluation of the economy, students will possibly have a more difficult time finding lenders for student loans. Bataille said that the university does not want students to worry about finding loans.

“Given the current economic climate, Georgetown is taking all possible steps to ensure that our students will be able to have access to educational loans,” Bataille said. She added that all students who need loans have secured them for the current academic year.

The Office of Student Financial Services Web site says that the school “maintains its commitment to ensuring that it is financially possible for all qualified applicants to enroll at Georgetown University.”

Under the direct lending program, the Department of Education will act as a lender rather than a private financial source – instead of borrowing from private lenders who receive both subsidies and a guarantee of repayment, students will borrow directly from the Department of Education.

Aside from keeping an eye on the economy, Georgetown officials will be seeking out stable potential lenders for the upcoming school year, Bataille said. The rates and benefits of these lenders will be published as soon as possible on the Office of Student Financial Service’s Web site.

Georgetown is currently part of the Federal Family Education Loan Program, a government-guaranteed student loan program. Under FFELP, students borrow money from private lenders, and the loans are guaranteed by the federal government. Historically, FFELP has had a lower default rate than that of direct lending.

Direct lending may bring about a more dependable loan sources and a simplified application process for students, as well as the elimination of some bureaucracy for the university, according to a June 13, 2007 New York Times article.

“The university will play a larger role in disbursing, reconciling and servicing direct loans,” Bataille said.

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