November 7, 2008

Direct Lending Could Overtake Bank-Based Loans

By PAUL BASKEN

The growth of the Education Department's direct-lending system this year could be replicated in 2009, possibly leaving the now-dominant bank-based system as the minority supplier of federal student-loan money by next fall, according to findings from a survey of colleges.

The Web-based poll of 416 college financial-aid directors in October found that 6 percent of those using the bank-based system plan to switch to direct lending next academic year, and that 29 percent are considering

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