Congress Considers Changes to Student Loan Programs
Financial Aid Community Circulates Opposition Letters
MAJOR CHANGES ARE PROPOSED FOR 2010
Published: April 9, 2009
Last week, the U.S. House and Senate passed resolutions to implement President Obama’s federal budget for the fiscal year that begins October 1. The resolutions and the President’s budget proposal are not law – they are just the first step in the dialogue about how to shape future loan programs for students and their families.
The President’s budget proposal suggested a phase-out of the Federal Family Education Loan Program (FFELP) in favor of direct lending in July 2010, but the House and Senate resolutions differ on how the President’s budget should be implemented.
House Budget Resolution
Instructs the House Committee on Education and Labor to produce savings of $1 billion during the next five years on programs the committee oversees. Committee Chairman, Congressman George Miller (CA), indicated the budget instruction would be used to enact student loan reforms and assured his colleagues in the House that “…we will be able to work together as my committee and this Congress consider proposals to reform the Federal student loan program.” Miller expects there will be a role for private lenders in the future of the student loan program, indicating that there are over $500 billion outstanding FFEL program loans to be serviced as borrowers repay their loans.
Senate Budget Resolution
Does not include similar “savings” instructions for the Senate’s Health, Education, Labor & Pensions Committee. The resolution includes an amendment by Senator Lamar Alexander from Tennessee and Senator Mike Enzi from Wyoming that instructs the Senate committee to “…make higher education more accessible and affordable while maintaining a competitive student loan program that provides students and institutions of higher education with a comprehensive choice of loan products and services…”
When lawmakers return from their spring recess the week of April 20, a compromise measure will have to be worked out by the House and Senate budget committees. The education committees in the House and Senate will then begin discussing changes to the student loan programs. They are free to consider alternate proposals that achieve the fiscal requirements of their chamber’s budget committee.
The traditional budget process and timeline has many steps and ideally should be completed by October 1 when the FY2010 federal budget year begins. As with any legislation, changes to student loan programs could have varying implementation dates.
Many financial aid associations and student loan groups have expressed their support for FFELP and the ancillary services provided by lenders and guarantors. Thanks for your support and your efforts. It’s wonderful to have advocates who strongly believe in service, competition and choice for students and families.
FINANCIAL AID COMMUNITY CIRCULATES ONLINE LETTER TO CONGRESS TO OPPOSE STUDENT LOAN PROPOSAL
A group of financial aid leaders have created an online letter to Congress to oppose the elimination of the FFEL program in the administration’s budget resolution proposal. They are inviting college and university faculty, staff and students to endorse their position. The letter will be sent to members of Congress.
THOUSANDS SIGN ONLINE PETITION TO PRESERVE CHOICE OF STUDENT LOAN PROGRAM
Thousands of concerned citizens, including students, parents, and financial aid professionals have signed an online petition by the Consumer Banker’s Association urging the U.S. Congress to preserve choice and competition in student loan options.
Archived Articles
NSLP'S ANNE BARTON HELPS FAMILIES PREPARE COLLEGE FINANCES
Published: January 4, 2009
NSLP's Regional Director Anne Barton was featured on the Credit Union National Association's nationally broadcast Home and Family Finance program. She stressed that federal loans are available and urged parents and students to fill out the FAFSA form now.
STUDENT LOAN COMMUNITY ASSURES HIGHER ED OF FFELP COMMITMENT
Read Student Loan Community Letter to FAOs
Published: November 21, 2008
Endorsed by Several Student Loan Community Organizations
NSLP joins the student loan community in reassuring higher education institutions that lenders and guaranty agencies in the Federal Family Education Loan Program (FFELP) remain committed to providing students, parents and schools with a high level of service and effective default prevention programs. FFELP providers offer much more than just Federal Stafford and PLUS loans, including college awareness and financial literacy programs that support the mission of making postsecondary education more accessible and affordable. FFELP continues to serve the vast majority of higher education institutions and has successfully provided necessary funds to help students attend the postsecondary institution of their choice for more than 40 years.
Learn more by downloading these resources:
Guaranty Agencies Increase Access to Higher Education
Published: November, 2008
Editors: Developed by NCHELP, NSLP and its members
Financial Literacy Symposium 2008 Synopsis: Facing the Financial Literacy Challenge on Your Campus
Published: October 10, 2008
Editors: Brenda Vaughn and Sharon O'Neal
