The Michigan Daily

Vol. XCI, No. 21-S

-Thursday, June 4, 1981

Ten Cents

Sixteen Pages

State plans to
resume direct
student loans

Making a splash
A junior high school student cackles with delight after shoving his com-
panion off a fallen tree into the Huron River near Island Park.
Prison under control
in Canad a after riot

By MARK GINDIN
After a five-month halt, the State
Direct Student Loan Program will
resume providing Guaranteed Student
Loans to students who cannot find a
commercial lending institution to do the
same, according to Senior Financial
Aid officer Elaine Nowak.
The funds had been unavailable for
disbursement since January because
the state had been unable to sell enough
bonds to meet the number of loans
disbursed, said Nowak, who is in
charge of the GSL program at the
University.
BUT, SHE WARNS, there may not be
enough money this time either, so
students should turn in applications as
early as possible.
The SDSP provides the GSL only to
students who are unable to locate a
commercial lending institution willing
to provide the loan. "The SDSL
program should be a lender of last
resort,' said Nowak. SDSL ap-
plications are taken only with a signed
rejection slip from a bank, she said.
THE PROCESS of receiving a loan
through the state program takes much
longer than through a private lender,
said Nowak. A state loan takes about
twenty weeks, while a commercial loan
only takes eight weeks under normal
circumstances, she said.
Packets containing the applications
and information on the renewed
program were sent Tuesday to the 1000
who had already signed up for the
program, according to Nowak.
, Of the 16,000 GSL's processed through
the financial aid office, 5,000 used the
SDSL program to obtain the funds,
"which is not a large number," said
Nowak.
THE BOND of $40 million is used to
finance the SDSL throughout the state
and "the volume is overwhelming,"
Nowak said. "They could run out again,
so students should apply as soon as
possible," she stressed.
Changes affecting the GSL program
proposed by Congress on the federal
level should not take effect until at least
October 1, which gives students a chan-
ce to take advantage of the present
programs, she said.

OUT-OF-STATE students will not be
affected by the renewed SDSLP
because they borrow from Chase
Manhattan Bank in a special
arrangement with the University,
Nowak said.
Since 1978, the number of GSL ap-
plications has risen at a rate of about 66
percent a year, said Nowak, and "there
must be some mechanism to stop the
growth." But she cautioned against
changing the rules and regulations at
the wrong time, such as the middle of
summer, the time of most loan ap-
proval activity.
IF A STUDENT searches in vain for a
commercial lender to supply the loan, a
notice of refusal signed by the bank is
turned in at the financial aid office,
which fills out the rest of the application
and sends it on to the SDSL office in
Lansing for funding.
The application is then sent to the
Michigan Guarantee Agency, which is
the federally-backed organization
charged with approving all GSL loan
applications.
If the SDSL does not receive the
money expected from the bond sale, the
loan cannot be made. But Nowak says
chances are "remote" that the bond
sale will not go through.
THE MAXIMUM amount a depen-
dent undergraduate may borrow under
the system is $12,500 at $2,500 per class
level. An independent undergraduate
may borrow up to $15,000 at $3,000 per
class level, according to Nowak.
Graduates may borrow up to $25,000,
including what was already borrowed
while an undergraduate. $5,000 is the
maximuma graduate may borrow each
year under the GSL program.
The interest charged on the loan is
paid by the federal government until
the student graduates. After
graduation, the student must repay the
loan within ten years at nine percent in-
terest. Students who have previously
borrowed under the program are
charged seven percent interest for all
loans.

From AP and UPI
MATSQUIK, British Colum-
bia-Police guards and Canadian
soldiers swept through a burning prison
yesterday, flushing out the last of
almost 300 prisoners who had taken
over the facility with baseball bats and
pipes and rioted during the night.
Canadian prison spokesman Jack
Stewart said at least seven inmates suf-
fered injuries, all relatively minor.
There were no reports of injuries to
prison employees, police or soldiers.
BY EARLY afternoon, most of the 288
rioting inmates had surrendered and
stood sullen-faced and hunched against
a pelting rain in a yard behind a high

wire fence. Smoke still rose above the
lush green farmland near this Fraser
River valley community, located about
30 miles east of Vancouver.
A final sweep early in the afternoon
turned up the last few holdouts,
Steward said.
The riot, believed triggered by a
complaint about working conditions in
the kitchen of the federal medium-
security prison, caused "massive"
damage to a dining hall, three-story
dormitory, gymnasium, chapel, stores
and administration building, Steward
said.
A GROUP OF guards was forced to
See CANADIAN, Page 2

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