Education Department Celebrates Switchover to Direct Lending

Washington

A year after Congress abolished bank-based lending in the federal student-aid programs, Education Department officials are celebrating the generally smooth transition to 100-percent direct lending.

On Tuesday, Secretary of Education Arne Duncan stopped by the department’s Office of Federal Student Aid to thank employees for their hard work during the switch; on Wednesday, the department’s chief operating officer, William J. Taggart, will send a letter to colleges thanking them for theirs.

When Congress enacted legislation ending bank-based lending last March, some small colleges and historically black institutions worried that the switchover to a new system would be technically difficult, confusing, and costly. Most found that the move to direct lending was easier than they’d imagined, Secretary Duncan said.

“The fact that I spent zero amount of my time dealing with complaints and colleges calling angry is a real testament to you,” he said in his meeting with employees.

In his letter, Mr. Taggart praises student-aid administrators at colleges for adapting quickly to the changes.

“As a result of their efforts, today, any student who requires federal student aid to attend a participating institution of higher learning in this country can generally receive it,” he wrote.