Students now have a new option when it comes time to pay off their college loans.

In U.S. House of Representatives action last week, the Emergency Student Loan Consolidation Act was passed by a voice vote.

The new act would allow students to consolidate loans under the Federal Family Education Loan Program and the Direct Loan Program into one loan until Oct. 1, 1998.

The current act, which amends to the Higher Education Act of 1965, does not allow these two types of loans to be consolidated.

“This act is very helpful to the students. It is user-friendly and promotes efficiency,” said Congressman Leonard Boswell.

Director of Student Financial Aid Earl Dowling does not necessarily agree.

“The act was not supported by the administration, but I am a supporter of it.

“It is extremely advantageous to students adversely affected by the slowdown in consolidation of loans by the Department of Education,” Dowling said.

Dowling said the act came just a little too late.

“The Department of Education couldn’t keep up with consolidation requests, so the Congress proposed an emergency piece of legislation. At the time it was started, it was an extremely good idea, but by the time it got passed, it was no longer needed,” Dowling said.

The act prohibits an eligible lender from discriminating against any borrower who wants to consolidate loans based on the number or type of eligible student loans the borrower seeks to consolidate.

The act also prohibits discrimination based on the type or category of institution of higher education the borrower attended.

Discrimination based on the interest rate authorized to be collected with respect to the consolidation loan and the types of repayment schedules offered to borrowers is also prohibited.

When loans are consolidated, individuals are usually able to receive more favorable loan terms and are able to repay over a longer period of time.

The new act caps the interest rate of the consolidated loan at 8.25 percent.

“I think that the new act will also prove to be beneficial to the loan companies. The students will be more likely to pay one lowered monthly payment than the several they may be paying now,” Boswell said.

The act will also help out students who receive the HOPE scholarship, created under the 1997 tax agreement.

Students who receive the HOPE scholarship will not have their Pell Grants or other student financial aid reduced.

The bill says the HOPE scholarship tax credit would not be counted as available family income.

This prevents a reduction in a student’s financial aid package.

Dowling was unsure of the impact this act would have on Iowa State students.

“Most of the students who would take advantage of this are graduate students, so we have no tabs on them,” he said.