Last evening, under suspension of rules, the House overwhelmingly passed H.R. 6889, which would provide a one-year extension of provisions in the Ensuring Continued Access to Student Loans Act (ECASLA) that allow the Department to purchase FFELP loans. The motion to extend those provisions passed by a vote of 368 to 4 with 61 not voting.
Currently, ECASLA allows the Department to purchase FFELP loans first disbursed on or after October 1, 2003, and before July 1, 2009. H.R. 6889 would extend the Department's authority to purchase loans first disbursed through July 1, 2010. The bill would also extend other provisions in ECASLA that would allow schools to be eligible for institution-wide lender-of-last resort designation through June 30, 2010.
In a letter to lawmakers before the vote, NASFAA President & CEO Dr. Phil Day urged Congress to extend the provisions "that have been vital in helping students and parents secure federal student loans."
"We want to give families as much time as possible to get their financial aid in order," Day wrote. "By dealing with this issue now, we'll avoid the media hype that created so much uncertainty about the availability of loans this year."
Lawmakers agreed. "It is critical that we extend the authority for the Secretary to purchase student loans to avoid any uncertainty about the access to this critical source of student financial aid," said Rep. Rubén Hinojosa (D-TX), chairman of the Subcommittee on Higher Education, Lifelong Learning and Competitiveness.
Day also pointed out that financial aid administrators will have their hands full implementing reauthorization provisions, and will have little time to keep "checking and double-checking on the availability of loan funds for families."
"Absolutely yes, we support the extension," Day explained to Inside Higher Ed. "For us it isn't about the lender's comfort with the realities of whether the market is going to work for them or not, it is and has always been about giving our students, their parents, and our financial aid counselors a reasonable foundation of certainty upon which to base their discussions so that the student can be effectively served and know what their options are now rather than later."
Yesterday's vote came after a troubling day on Wall Street. Two of the largest U.S. brokerage houses - Lehman Brothers and Merrill Lynch - began signaling insolvency over the weekend. The largest U.S. insurance company - AIG - has also announced plans to enter bankruptcy. With the capital markets in such terrible condition, lawmakers made short work of the student loan bill.
"At a time when our rough economy is already dealing a huge blow to American families, we can't allow trouble in the credit markets to further price students out of a college degree," said Rep. George Miller (D-CA), the chairman of the House Education and Labor Committee. "With market turbulence showing no signs of letting up, it's only prudent to make sure that students have every assurance that the federal student loans they need will be there next year."
The Department's liquidity plan began operating last month. With some minor exceptions and delays, most federal loans disbursed without incident.
The Senate must now approve the bill before it can be signed into law by the president.
Additional Resources
By Justin Draeger
NASFAA Associate Director for Communications
Posted 09/16/08 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web Site questions or comments to Web@NASFAA.org.
