Advisers Legally Restricted From Providing Students With Certain Loan Information
"Federal laws that restrict what loans advisers are allowed to mention to students mean that students are not provided with information that could save them money, according to Tom Melecki, director of Student Financial Services," the University of Texas at Austin's Daily Texan reports.
"Federal law currently prevents institutions from recommending, promoting or endorsing private student loans, which are defined broadly enough to include loans offered by the state of Texas. One state loan program, the B-On-Time program, offers a no-interest loan that is fully forgiven if the student graduates on time for their degree with a GPA of at least 3.0. According to Melecki, advisers are not allowed to recommend this loan to students unless they specifically ask to be put on the waiting list.
Melecki said the restrictions on what information an adviser can share means many students never find out about options like the B-On-Time loan. According to Melecki, $32 billion in B-On-Time money went unused in Texas in 2012, though more of the money was accessed in 2013. ...
According to Karen McCarthy, senior policy analyst at the National Association of Student Financial Aid Administrators, one option provided to the University is to advertise a list of approved, independent lenders to students, with the hopes that those lenders recommend alternative loans. McCarthy said most universities choose not to use this option because they cannot guarantee the trustworthiness of the independent lenders.
'[Universities] are kind of stuck between a rock and a hard place,' McCarthy said."
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