State education agency retools after student loan overhaul

SALT LAKE CITY — All student loans made through the Utah Higher Education Assistance Authority since July 1, 2008, are now in the hands of the federal government. But they may be on their way back to Utah.

UHEAA no longer makes loans directly, thanks to legislation tacked on to the health-care reform bill Congress passed in March. The new law, effective July 1, eliminates fees paid to private lenders by ending their role as middlemen. The estimated $68 billion in savings over 11 years will be used to expand Pell Grants for low-income students.

Although banks were the legislation's primary target, UHEAA had collateral damage. The agency lost 29 full-time positions — 18 percent of its work force — in voluntary buyouts at the end of May.

"That was a tough pill for us to swallow," said Dave Feitz, UHEAA's executive director. He was in Washington, D.C., on Monday to discuss a possible contract with the U.S. Department of Education to service Utahns' college loans locally. For now, most are being handled by FedLoan Servicing, a nonprofit agency based in Pennsylvania. The contract would allow UHEAA to build its staff back up.

Wherever the loans are serviced, they now originate on college campuses. However, it's not necessarily as much extra work as it sounds: John Curl, director of financial aid at the University of Utah, said his office already had a direct loan program. Students would mainly notice a difference when it comes time to repay their loans if they don't have the local convenience of UHEAA's "incredible customer service," he said. "We may find we miss that a great deal."

Other schools may have more catch-up work to do, Feitz said. The changes come on the heels of a year with record volume as UHEAA loaned $517 million to 128,000 students, bringing its portfolio up to $2 billion.

Feitz said Utah boasts the lowest default rate in the country. According to The Project on Student Debt, an initiative that promotes affordable access to higher education, the state also has the lowest average student-loan debt, at $13,041.

For questions about student loans, contact UHEAA at 801-321-7294 or visit www.uheaa.org.

e-mail: pkoepp@desnews.com