Reps. George Miller (D-CA), chairman of the House Committee on Education and Labor, and Ruben Hinojosa, chairman of the House higher education subcommittee, sent a letter to other Congressional representatives yesterday to update them on the availability of federal student loans. Miller and Hinojosa encouraged members of Congress to direct their constituents to their college financial aid office if they have concerns about finding a student loan.
"Many colleges and universities work with many lenders, and are currently working to ensure that the lenders they use will continue to be able to provide federal student loans for the coming school year," explains the letter.
Students and families who are not able to find a student loan should contact their designated guaranty agency or the Office of Federal Student Aid, according to the letter.
Miller and Hinojosa highlight the Ensuring Continued Access to Student Loans Act in the letter and point out that no student has yet been denied a federal student loan. The letter also emphasizes the importance of the Direct Loan Program, especially during the current credit crunch as "hundreds of colleges and universities have announced they will join more than 1,000 institutions that already participate in the Federal Direct Loan program."
The two leaders also point out that families should always borrow federal loans before private loans. A point that Miller and Hinojosa feel so strongly about that it is included in pending HEA reauthorization legislation that would "make sure borrowers are aware of their federal student aid options."
NASFAA has advocated that the HEA require all private student loans be certified by a school's financial aid office in an amount that doesn't exceed cost of attendance less other financial aid. Differences in the Senate and House HEA reauthorization bills are currently being negotiated in conference.
The full letter - as provided to NASFAA - follows.
June 9, 2008
Student Loan Availability
Dear Colleague:
In recent months, turmoil in the U.S. credit markets has made it harder for some lenders to
secure the funding needed to make new federal student loans. It is important for families to
know that, so far, no student or parent has been denied a federal student loan for which they
are eligible, and Congress has just taken steps to ensure that continues to be the case,
regardless of what happens in the nation's credit markets.
Last month, Congress enacted the Ensuring Continued Access to Student Loans Act, which
provides the Secretary of Education with additional tools, in addition to the safeguards
already in the law, to protect federal student loan access. It also gives families hit hard by the
economy more flexibility when borrowing federal student loans and increased the annual
federal student loan borrowing limits.
Though some lenders have announced plans to scale back their lending activity in the
federally guaranteed student loan program, others have announced plans to increase their
activity in the program. Sallie Mae, the nation's largest lender, recently announced that it will
continue to provide federal student loans for the coming year. In addition, hundreds of
colleges and universities have announced they will join more than 1,000 institutions that
already participate in the Federal Direct Loan program. The Direct Loan program does not
refuse to make loans to a school's students based on the characteristics of the college or the
students attending that college, nor does it require students at a college to generate a
specified loan volume. The Secretary of Education has recently affirmed that the Direct
Loan program can accommodate a significant increase in demand for the program.
In the past year, Congress also enacted the College Cost Reduction and Access Act, the
single largest increase in college aid since the GI bill. The law cuts interest rates on need-based
federal student loans over the next four years, increases the Pell Grant scholarship for
low-income students by more than $1,000 over the next five years, makes federal loans more
manageable for borrowers to repay, provides up-front tuition assistance of $4,000 each year
for undergraduate students who commit to teaching, and more. The law carries no new cost
for taxpayers.
Regardless of the current economic market, it always makes sense for students and parents
to consider federal college loans before taking out more expensive private college loans.
Congress is currently finalizing legislation that will make sure borrowers are aware of their
federal student aid options. The College Opportunity and Affordability Act would also
address rising college tuition prices, simplify the FAFSA application process, make textbook
costs more manageable for students, clean up unethical practices by lenders in the student
loan industry, and provide critical protections to borrowers of both federal and private loans.
In the meantime, please encourage your constituents to consult with their college financial
aid office if they have concerns about finding a loan. Many colleges and universities work
with many lenders, and are currently working to ensure that the lenders they use will
continue to be able to provide federal student loans for the coming school year. If their
financial aid office isn't able to provide them with additional lender options, students can
also contact their state guaranty agency or the Office of Federal Student Aid at the U.S.
Department of Education at the following toll free numbers:
- Federal Student Aid Information Center (FSAIC) . . . 1-800-4-FED-AID (1-800-
433-3243)
- TTY users (for the hearing-impaired) can call . . . . . . 1-800-730-8913
- Callers in locations without 800 number access . . . . . 1-319-337-5665 (not a toll
free number)
Further information on continued student loan availability can be found at the Committee
on Education and Labor's website at http://edlabor.house.gov/.
By Justin Draeger
NASFAA Associate Director for Communications
Posted 06/10/08 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web Site questions or comments to Web@NASFAA.org.
