Student Borrowers May Get Financial Break

Seeking to match incentives offered by banks, the Clinton Administration wants to give college students a $600 break on their education loans.

The Education Department in June made three moves to make direct loans more appealing to student borrowers. ED cut the origination, or upfront loan fee from 4 percent to 3 percent. That is a saving of $100 on the cost of a 10-year, $10,000 loan, officials say.

Other changes would drop interest rates by more than a half-percentage point if students consolidate their loans while still in school, and by a quarter of one percent if borrowers agree to make payments electronically. As a result of all the changes, students will save about $631 on a typical $10,000 loan.

"Many students are struggling to pay their way through school, and every dollar helps," Education Secretary Richard Riley says.

The move is designed to counter recent changes in the FFEL loan program run by banks. Some analysts say the bank changes could force some colleges to drop out of the direct loan program, in which the federal government provides loan capital. However, ED says that the changes will "help restore parity" between the direct-lending and FFEL programs.

Dickinson President Replaces Longanecker at ED

The retiring president of Dickinson College in Pennsylvania is the White House choice to replace David Longanecker as assistant secretary for post-secondary education.

President Bill Clinton has nominated A. Lee Fritschler for the top Education Department college post. Fritschler is scheduled to leave Dickinson this summer after serving as the college president for 12 years. He is a former scholar at Washington, D.C.'s Brookings Institution and in recent years has directed an effort among colleges to bolster liberal arts education.

Longanecker is leaving to become executive director of the Western Interstate Commission for Higher Education. The Senate must confirm Fritschler's nomination.

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