The Department continues to feel pressure to act on H.R. 5715 as soon as possible. Last week NASFAA President Dr. Phil Day urged the U.S. Department of Education to issue regulatory guidance on the new legislation before Memorial Day.
"As we are reaching the height of the award letter season, rapid implementation of the provisions in H.R. 5715 is critical," wrote Day. "I also urge the Department to execute H.R. 5715's provisions before Memorial Day so that its safety nets are operational as soon as possible."
The following day, leaders of the lending community also called on the Department to use federal capital to infuse liquidity into the market.
Finally, last Friday, Congressman Paul Kanjorski (D-PA), Chairman of the House Financial Services Capital Markets, Insurance, and Government Sponsored Enterprises Subcommittee, also wrote a letter to Education Secretary Margaret Spellings and U.S. Secretary of the Treasury Henry M. Paulson, and urged them to immediately implement H.R. 5715.
"Nearly three weeks have passed since Congress completed its work on H.R. 5715, but we have yet to see any meaningful action from the Administration to implement this time-sensitive legislation," said Chairman Kanjorski. "The Administration must act before Memorial Day in order to prepare for the peak lending season this fall. Students must have every opportunity to further their education, and it would be irresponsible for the Administration to allow anyone to drop out of school because the Administration did not act quickly enough to implement the law."
Kanjorski has introduced two other bills to address problems in the student loan marketplace. On April 8, Chairman Kanjorski introduced the Emergency Student Loan Market Liquidity Act, which would give the Federal Home Loan Banks emergency authority to provide student loan lenders with access to needed capital. On April 29, Chairman Kanjorski introduced H.R. 5914, the Student Loan Access Act, which would make it absolutely clear that the Administration can purchase federal student loans using the Federal Financing Bank in the Treasury Department.
In its letter, the lending community also suggested some alternative ideas to help solve the credit crunch. Some of their solutions include: a "stand-by loan purchase" program, a proposal to purchase participation interests in student loans, and a whole-loan purchase option in which servicing is retained by the seller. Lenders urged the Secretary to implement these options "immediately and without delay."
By Justin Draeger
NASFAA Associate Director for Communications
Posted 05/20/08 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web Site questions or comments to Web@NASFAA.org.
