Arvest issues statement on student loan change

Bentonville-based Arvest Bank took the unusual step Wednesday (March 31) of notifying its customers, universities and the media that the federal government is soon to end the national banking industry’s role in arranging student loans.

A part of the federal health care law eliminates the Federal Family Education Loan Program with the goal of saving up to $68 billion in 10 years. President Barack Obama said the savings will come from removing banks as an "unnecessary middlemen" in which the banks collected billions in interest payments. Obama has said a federal government dealing directly with students seeking loans can instead redirect the previous interest payments into more loans and grants to students.

Republicans in Congress have criticized Obama for at the same time demanding banks loan more money to individuals and businesses while pulling the student loan business from their books.

Arvest Spokesman Jason Kincy said Arvest made the announcement to ensure awareness among university officials, students and future students. The bank, which has 230 bank operations in Arkansas, Kansas, Missouri and Oklahoma, is the largest student loan lender in Arkansas and the third-largest student loan lender in Oklahoma.

“We really want to make sure that students and universities are well aware before the deadline (June 30, 2010),” Kincy told The City Wire when asked why Arvest decided to issue the press release. “We didn’t want anyone to be caught off guard. … We felt it was our responsibility to get that word out.”

The bank encouraged students thinking about loans for the fall 2010 semester to contact the U.S. Department of Education at (800( 557-7392, or visit the federal student loan Web site.

As to an effect on the bank, Kincy said only a “handful” of employees were involved in the student loan work, and they will be easily absorbed into other loan operations.

“It’s not like this is a major department shutdown,” Kincy said, adding that the student loans were a “very small” portion of more than $2 billion loaned by the bank in 2009.

Kincy would not be drawn into a prediction about the student loan change being easier or more difficult.

“A lot of it has to do with how it will be executed by the federal government,” Kincy said.