Lawmaker's in the Senate and House issued letters to the Secretaries of the Education and Treasury Department urging them to provide a solution to ensure that students will have uninterrupted access to student loans.
One of the letters sent to Education Secretary Margaret Spellings and Treasury Secretary Henry Paulson was signed by 20 Senators. The other letter was sent by Senators and Representatives from Pennsylvania.
The letter from 20 Senators notes that students and families have began to feel the effects of disruptions in the capital market.
"The FFELP, which initiates 80 percent of our nation's student loans, relies heavily on that market; and the severe liquidity problems therein have created a credit vacuum directly impacting students in our respective states."
The Senators urge Spellings and Paulson to use the authorities of their departments to provide a solution and said they look forward to hearing the secretaries' plans to assure middle-class families that access to student loans will not present an obstacle to achieving higher education aspirations.
The letter from Pennsylvania lawmakers states that the lawmakers don't think the financial markets can be relied on to provide the capital necessary to fund the nearly $60 billion in FFELP loans that students will need for the 2008-09 academic year.
"We call upon you to work cooperatively and quickly to identify and implement a plan to provide access to capital sources for use in originating and purchasing FFELP loans," the letter states, "This plan should provide short-term relief for those entities denied access to the credit market or who cannot obtain financing at reasonable rates."
The Departments of Education and Treasury have indicated that they are following developments closely, and Education Department officials have said that, so far, no students have been denied access to federal education loans. In addition, the Consumer Bankers Association sent letters to institutions assuring them that students would continue to have access to federal student loans.
By Haley Chitty
NASFAA Assistant Director of Communications
Posted 03/13/08 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web Site questions or comments to Web@NASFAA.org.
