Washington, D.C. (February 26, 2009) President Obama took bold steps today to make a college education attainable for millions of students by making student financial aid a top funding priority in his FY 2010 budget blueprint. On behalf of the 3,000 financial aid offices that the National Association of Student Financial Aid Administrators (NASFAA) represents and the millions of students served by NASFAA members, the Association expressed gratitude to President Obama for his efforts to eliminate financial barriers to higher education.

The budget blueprint issued Thursday by the Obama administration outlines goals to:

• Tie Pell Grant increases to the Consumer Price Index plus 1 percent and make the Pell Grant program a mandatory spending program. The Pell Grant maximum award for FY 2010 will be $5,550.

• Originate all new loans in the government-run Direct Loan program and reinvest savings in aid to students.

• Expand and improve the Perkins Loan program to eliminate the inefficiencies and inequalities in the current program.

• Create a new five-year, $2.5 billion Access and Completion Incentive Fund to support innovative state efforts to help low-income students succeed and complete their college education.

"I commend President Obama for proposing bold steps to make college access, affordability, and success a top priority in the coming years," NASFAA President and CEO Dr. Philip Day said. "The time for tweaking the student aid system has come and gone. We now need a drastic overhaul of the system to help today's student overcome financial barriers that keep them from successfully completing a higher education program after high school. NASFAA's Board of Directors has recognized the need for real changes to the financial aid system and has initiated a National Conversation Initiative to redesign the student aid program to better benefit students, families, and the nation as a whole. We plan to present NASFAA's recommendations to the Obama administration in the near future to help guide him in his efforts to make college more accessible and affordable.

"For years the Pell Grant award has remained relatively flat while the cost of everything else, including a college education, has increased. President Obama's proposal to tie the Pell Grant award to the CPI plus 1 percent is a significant victory for low-income students struggling to pay for college. It is also a victory for the nation, which will benefit from a better educated, more competitive workforce.

"The Pell Grant program has operated like a mandatory spending program for years, but it has been subject to the annual appropriations process. This has placed the program on unstable ground at times. NASFAA has for many years recommended that the Pell Grant program become a true mandatory spending program, and we are overjoyed to learn that Obama is proposing the same solution. This change will put the program on stable ground and make it predictable for students and parents.

"NASFAA appreciates the Obama administration's effort to make the student loan program more efficient and simpler, but we have some concerns about eliminating the Federal Family Education Loan Program (FFELP). The FFELP public/private partnership has provided millions of students with loans to attend thousands of higher education institutions across the country. Recently, the freezing credit market has created instability in the FFELP causing great anxiety for students, parents and colleges about the continued availability of student loans. Congressional efforts have shored up the FFELP in the short term, but a longer-term solution is needed. NASFAA encourages the Obama administration and Congress to carefully consider all the implications related to eliminating the FFELP. Students and parents should not be negatively impacted by losing FFELP participant-provided services like college access programs, financial literacy education and loan delinquency and default prevention. NASFAA is also concerned about the timetable of FFELP elimination. Schools should be given enough time and support to ensure their students have unhindered access to student loans.

"NASFAA strongly endorses Obama's proposal to expand and improve the Perkins Loan program. This program provides vital, low-cost loans to students, but has not been funded in recent years and is distributed to institutions based on an antiquated formula. As the Obama administration and Congress develop a new formula to distribute these loan funds, we encourage them to ensure that these dollars are equitably and efficiently distributed so the new funding targets students with the most financial need.

"Obama's proposal to create a new Access and Completion Incentive Fund is a welcome change and is long-overdue. The federal government and states have a vested interest in college students' success and the time has come for lawmakers at all levels of government to honor this commitment. Investments we make today to help students achieve their higher education goals will provide a solid foundation for the future success of the American economy and pay for itself many times over through increased tax revenue and reduced dependence on social programs.

"On behalf of our members and the millions of students they serve, NASFAA extends its gratitude to the Obama administration for taking bold steps to improve the financial aid system and make it a national funding priority. We also look forward to continue working with the Obama administration and Congress to eliminate financial barriers that keep students from succeeding in higher education."

About NASFAA
The National Association of Student Financial Aid Administrators (NASFAA) is a nonprofit membership organization that represents more than 20,000 financial aid professionals at nearly 3,000 colleges, universities, and career schools across the country. Each year, financial aid professionals help more than 16 million students receive funding for postsecondary education. Based in Washington, D.C., NASFAA is the only national association with a primary focus on student aid legislation, regulatory analysis, and training for financial aid administrators. In addition to its member Web site at www.NASFAA.org, the Association offers a Web site with financial aid information for parents and students at www.StudentAid.org.

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Posted 02/26/09 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web site questions or comments to Web@NASFAA.org.