There's been no shortage of bills coming out of Congress that would affect federal student loans. On Monday, Senator Christopher Dodd (D-CT) introduced one more, the PLUS Loan Borrower Protection Act (S.2895), to "ensure that students and parents can qualify for PLUS loans even if they have had trouble making their mortgage payments in light of the recent mortgage meltdown," according to Dodd's press release.
Parent PLUS loans are made available to parents who meet minimum credit standards. Parents who are delinquent on mortgage payments for more than 90 days would normally be ineligible for a PLUS loan. Under Dodd's bill, parents would not be automatically disqualified if they have been delinquent on payments or even if they have experienced a foreclosure on their primary residence as of Jan. 1, 2007 through Dec. 31, 2012. A similar measure was included in H.R. 5715 that passed overwhelmingly in the House last week.
"Ensuring that students have affordable options to finance a college education should be one of our highest priorities," said Dodd. "Students should not be denied access to PLUS loans simply because our housing market was mismanaged - that is both unacceptable and wrong."
That brings the total number of bills introduced in Congress to address the student loan crunch to five, with the possibility of more to come.
The Senate education committee is considering a proposal submitted by the Education Finance Council - a DC based organization that represents nonprofit student loan providers - which would require the Department to commit to buying loans from lenders at face value with the option of allowing that lender to repurchase that loan at the same value any time before July 2009, Inside Higher Ed reports. EFC believes this "standby loan purchase agreement" would allow lenders to issue bonds more easily because they could demonstrate to investors that they could get out of them at any time.
So far nearly 60 lenders have either permanently or temporarily ceased making federal loans. Other lenders such as Student Loan Corp. (Citibank), Chase, and Bank of American have said that they will limit who they lend federal loans to based on the institution students attend. All of this is punctuated by an announcement from Sallie Mae last week - by far the largest student loan provider -that top executives are holding "daily deliberations" on whether the company will have enough capital to continue offering federal student loans.
By Justin Draeger
NASFAA Assistant Director for Communications
Posted 04/23/08 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web Site questions or comments to Web@NASFAA.org.
