NASFAA President Dallas Martin sent a letter to House Committee on Education and Labor Chairman George Miller (D-CA) expressing NASFAA's support of the Democrats' proposal to cut student loan interest rates in half over the next five years.
"On behalf of the National Association of Student Financial Aid Administrators (NASFAA), representing student aid administrators at approximately 3,000 postsecondary institutions, I am pleased to inform you that NASFAA supports passage of H.R. 5 and we encourage all your colleagues to vote for the bill," Martin wrote. "Reducing total loan costs for subsidized Stafford loan borrowers is one of the most beneficial actions Congress can take. Cutting in half subsidized Stafford loan interest rates is a highly targeted policy providing financial relief to the neediest of our federal student loan borrowers."
Martin noted that the Committee on Education and Labor has much work to do to implement effective student aid policies through reauthorization of the Higher Education Act.
"NASFAA has long-supported and urged congressional action to change the Title IV programs to achieve the goal of universal access to a postsecondary education," Martin wrote.
To make universal college access a reality, Martin urged that the highest priority be placed on increasing Pell Grant funding and recommended that the maximum Pell Grant award for FY 2008 be increased to $5,100. In addition, Martin advocated sensible modification and increased funding of campus-based financial aid. He also urged lawmakers to increase federal loan limits so that borrowers are not forced to take out alternative, private loans which generally carry a higher interest rate and usually lack borrower benefits like deferments, consolidation or loan cancellation for those who pursue certain careers.
"This bill is a positive first step in rebuilding the Title IV student assistance programs," Martin wrote. The bill will help students "not be overly-burdened with student loan debt and, upon graduation, become the educated and productive citizens our nation needs as we navigate a future full of challenges."
While the details of the bill have not yet been publicly released, many have speculated that the cost of lowering interest rates will be offset by reducing subsidies to lenders. The Consumer Banker's Association, which represents many major student lenders, issued a press release expressing its opposition to the proposal.
"These budget cuts, when coupled with those made last year, risk the ability of lenders to invest in technology, enhance customer service, and offer benefits to borrowers," said CBA President Joe Belew in the press release.
Miller and other Congressional Democrat leaders are scheduled to hold a press conference today to urge Congress to act quickly on legislation to cut student loan interest rates.
By Haley Chitty
NASFAA Assistant Director for Communications
Posted 01/11/07 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web Site questions or comments to Web@NASFAA.org.
