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ESCANABA -- With the signing of the education reconciliation act on Tuesday, starting July 1, student loans through colleges will only come from the government.  But how will this affect local colleges and their students?

From now on, the federal government will be the only lender for colleges providing financial aid.

"Since the mid '90s, there's been two delivery systems for the federal student loan program," explains Mike Rotundo of Northern Michigan University's Financial Aid Department.  "One of them has been through the federal institutions or financial institutions, while the other one, the direct loan program, has been through the Department of Education through their federal direct loan program."

Now, the government-provided direct loan program is the only option.  Northern Michigan University has been using it for years.

"We've always felt that the direct loan program was a very efficient program and we've been very happy with the program," Rotundo said.

According to the government, $68 billion of taxpayer money that would have been used on private lenders over the next 11 years can now be used somewhere else, like for the Pell Grant program, which provides aid to needy students.  But many students at Bay de Noc College in Escanaba are concerned because their school currently uses private lenders.

"I'm a little nervous because I'm just not sure how the government's going to use the money; you know if they're going to use it wisely to, you know, help me out or if they're going to use it pass some of the other stuff they need," said Bay de Noc student Tom Hautamaki.

But the school isn't concerned.

"It's not going to impact students at all," said Bay de Noc financial aid coordinator, Ruth Germain.  "The financial aid is the same as it was under the previous bill, the only difference is that we'll be a direct lending school versus a FELP school."

The bill doesn't say anything about regulating loans that students seek privately in addition to the aid they receive from colleges.