NASFAA Urges Congress To Ensure Students' Access To Loans

Financial aid association recommends injection of liquidity into student loan market to ensure seamless access to loans

The National Association of Student Financial Aid Administrators (NASFAA), a nonprofit association representing financial aid professionals at 3,000 colleges and universities, sent letters to the Senate and House Education committees urging action now to ensure students will have guaranteed access to loans this fall.

In the letter, NASFAA President and CEO Dr. Philip R. Day suggests three "safety nets" that should be in place to ensure "all federal loans remain accessible to all eligible students."

The three "safety nets" are:

Modifying the Lender of Last Resort (LLR) program to ensure that students don't face additional barriers to borrowing if the program is needed.
Ensuring schools who wish to transition to the Direct Loan program can do so with as little administrative and financial burden as possible.
Providing an infusion of liquidity to the student loan market so that lenders will be able to provide student loans and other benefits to students this fall. Dr. Day notes that this solution would provide the most seamless solution to assure loan availability, and would minimize the risks associated the untested LLR program and/or excessive demand on the Direct Loan program, which currently only handles about 20% of the postsecondary market.

Dr. Day notes that recent developments, including major student loan providers suspending their federal loan programs, suggest that problems in the student loan market are becoming more serious. He reminds lawmakers that any disruption in the loan program would have the greatest negative impact on low-income students, who may be discouraged from attending college if the aid process becomes any more complex or cumbersome.

"Solutions in place now will prevent access problems later," Dr. Day writes. "Problems solved now will prevent a true crisis from occurring."

Posted 03/26/08 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web Site questions or comments to Web@NASFAA.org.