Yesterday House Education Committee Chairman George Miller (D-CA) introduced the Ensuring Continued Access to Student Loans Act of 2008 to help eliminate the possibility of disruptions in federal student loans this coming academic year. Miller’s bill would make several changes to the federal student loan programs and provide additional backstops to provide liquidity in the federal student loan marketplace. The bill is scheduled for a markup today in the House Education Committee and amendments may be added. A summary of the bill is included.

"Chairman Miller’s bill will do much to help ensure that students have an uninterrupted supply of student loans this year," said NASFAA President & CEO Dr. Phil Day.

"NASFAA actively advocated for many of these provisions and I believe that the House bill, with its student friendly provisions, when combined with other benefits found in Senator Kennedy’s bill, will be a win for students," Day continued. The Senate has yet to take up Senator Edward Kennedy’s (D-MA) bill, the Strengthening Student Aid for All Act, which was introduced last week.

Increase Annual and Aggregate Stafford Loan Limits

Miller’s bill would increase the following amounts effective July 1, 2008.

• Increase the annual unsubsidized Stafford base amounts by $2,000 for graduate, independent, and dependent students.

• Increase aggregate loan amounts for undergraduate dependent students from $23,000 to $31,000

• Increase aggregate loan amounts for undergraduate independent students from $46,000 to $57,500

• Adjusts the maximum aggregate loan limits for graduate students to reflect the increased annual loan limits

Grace Period and Deferment For Parent PLUS Borrowers

Beginning July 1, 2008, the bill would allow parents to choose to defer payments on a PLUS loan until six moths after the date the student ceases to be enrolled at lest half time. Accruing interest could be paid by the parent borrower monthly or quarterly and be capitalized quarterly.

Special Provision for Parents Delinquent on Mortgage Payments

Parents who take out PLUS loans between July 1, 2008 and June 30, 2009 and fall no more than 180 days on their home mortgage payments would qualify as meeting extenuating circumstances needed to qualify for alternative repayment plans.

Institution-Wide LLR Certification

Under Miller’s bill institutions could request the designated guaranty agency to designate an entire institution as eligible for lender of last resort (LLR) loans. This would be effective on the date the bill becomes law.

Department as a Secondary Market

The bill temporarily authorizes the Department to purchase FFEL loans originated on or after October 1, 2003 as long as those purchases to not result in any cost to the federal government. The Department’s authority to purchase loans under this provision expires on July 1, 2009.

The bill would stipulate that if the Department acts as a secondary market lender, it must ensure that any proceeds paid to a lender are used in a "manner consistent with ensuring continued participation of such lender in the Federal student loan programs." In other words, prohibiting lenders from using those proceeds in any other way than ensuring they continue participating in FFELP.

Miller’s bill authorizes and appropriates any money to carry out the secondary market provisions of the bill.

Federal Coordination

The bill urges the Federal Financing Bank, the Federal Reserve, and other federal-chartered private entities such as the Federal Home Loan Banks to work with the Departments of Treasury and Education to ensure that students and families have access to federal student loan in the 2008-2009 academic year.

House Education Committee Markup

The bill is scheduled for committee markup later this morning at which point provisions could be added, changed, or deleted from the bill. NASFAA will provide a summary of the markup, along with a side-by-side comparison of the Senate and House versions within the week.

By Justin Draeger
NASFAA Assistant Director for Communications

Posted 04/09/08 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web Site questions or comments to Web@NASFAA.org.