WASFAA Letter to Senate Education Leaders Outlines Priorities for Reconciliation Bill

The Western Association of Student Financial Aid Administrators (WASFAA) expressed its support and detailed some concerns about provisions in the Student Aid and Fiscal Responsibility Act (H.R. 3221) in a letter sent to Senate education leaders on Aug. 17.

The letter to Senate Health, Education, Labor and Pensions Committee Chairman Edward Kennedy (D-MA) and the committee's ranking member Michael Enzi (R-WY) expresses support for efforts to increase Pell Grant and Work Study funding, but strongly opposes redirecting any savings created from changes to Title IV program to other goals like reducing the national deficit.

"The financial aid community does not oppose reform," the letter states. "Rather, we embrace reform that benefits students and we look to their interests to guide our recommendations."

WASFAA states in the letter that it understands that it is not possible to maintain the status quo of having both the FFEL and Direct Loan programs. WASFAA urges Senators to provide sufficient time to allow a smooth transition into Direct Loans or a hybrid program that replaces the current program. WASFAA also advocates for a system where contracted servicing would allow borrowers to have one servicer along with continued access to customized and local default prevention and financial literacy programs.

"We support competition and choice of loan providers and guarantors by students and schools by having the private sector involved in the development of a new hybrid student loan program so that the successful partnership of private and federal support of students can continue," the letter states.

WASFAA also expresses support for increasing the maximum Pell Grant and indexing future increases to the Consumer Price Index plus 1 percent. The letter expresses concern about using "acceleration of program completion" to determine eligibility for year-round Pell Grants because it makes many non-traditional students ineligible and contradicts the core principle of the Pell program.

The letter also:

Recommends making the Stafford Loan interest rate variable based on the 91-day Treasury bill plus 2.3 percent capped at 6.8 percent sooner than the July 1, 2012 implementation date in H.R. 3221, and make the Stafford Loan interest rate the same all loans (subsidized and unsubsidized) and all students (graduate and undergraduate).
Expresses support for $6 billion in additional Perkins funds, but highlights concerns about eliminating the in-school subsidy on Perkins Loans, using a new allocation formula to distribute Perkins funding to institutions, and requiring Perkins to be awarded to students only after their eligibility for Stafford Loans has been exhausted.
Recommends eliminating selective service registration and drug conviction questions from the FAFSA and including a section in the certification section for applicants to indicate they understand federal databases will be checked to verify they meet these eligibility requirements.
Disagrees with the H.R. 3221 provision imposing a $150,000 asset cap for eligibility for need-based aid and recommends that as long as assets remain a part of the formula, whether in the calculation or as a cap, the asset questions should remain.
Recommends using savings from changes in Title IV programs to increase spending on Pell Grants and existing loan programs, rather than funding new programs like the State Innovation Completion Grant, Community College Modernization, and the Construction and American Graduation Initiative.

Posted 08/26/09 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web site questions or comments to Web@NASFAA.org.