From the Consumer Bankers Association:
The President’s FY 2010 Budget proposal would eliminate the Federal Family Education Loan Program, effective July 1, 2010. At that time all new federal student and parent loans would be made by the Federal Direct Loan Program. Approximately 4,400 schools would have to switch programs. We invite financial aid professionals, parents, students, student loan professionals and concerned citizens to sign the following petition:
We, the undersigned, respectfully urge the Congress to preserve choice and competition in the federal student loan program. Competition between lenders that make federally guaranteed loans and competition between the two major federal student loan programs have led to significant and continuous improvements in service levels and quality and borrower benefits that reduce loan costs for students and parents.
Therefore, we urge Congress not to accept the Administration’s Budget proposal to eliminate the Federal Family Education Loan Program and to work on a bipartisan basis to preserve a stronger private sector-based federal student loan program that
>Provides student and parent borrowers a meaningful choice of lenders,
>Offers postsecondary institutions a meaningful choice of student loan delivery and servicing
>Offers borrowers and postsecondary institutions the wide array of delinquency, financial literacy and default prevention programs that promote responsible borrowing and repayment and minimize defaults.
Make your Voice Heard, Go To:
http://www.cbanet.org/government/ChoicePetition/ChoicePetition.cfm
What do you think of the following from NCHELP.org:
The Congressional Budget Office has issued its estimate of the cost to the federal government of H.R. 4137, the College Opportunity and Affordability Act of 2007, as approved by the House Education and Labor Committee on November 15. This bill represents the House versio of Higher Education A ct reauthorization. In contrast to the budget reconciliation legislation enacted in September (which was a cost cutting and spending bill), the HEA reauthorization is referred to as a policy bill.
According to the CBO, the bill (if enacted) would increase direct spending by $75 million in 2008 and decrease direct spending by $27 million over the 2008 to 2017 period. One of the “savers” in the bill is the change in the definition of “cohort default rate”. The bill includes an amendment offered by Congressmen Grijalva (D-AR) and Bishop (D-NY) that would revise the definition of cohort default rate by adding to the period of time in which a default is counted as part of a school’s cohort default rate. Right now, a borrower default is included in the rate only if it occurs during the fiscal year when the loan enters repayment or the following year. The amendment would add one year to this period. Schools are subject to losing eligibility to participate in Pell and the student loan programs if their default rate exceeds 25% for three years. While no schools have been subject to this sanction in recent years, that could change if the amendment were included in final legislation.
CBO projects that this change would reduce the number of schools eligible to participate in the student loan programs, thereby reducing direct spending by $27 million over the 2008 to 2017 period. Accordingly, all the net savings in the bill are attributable to the change in the cohort default rate definition.
The CBO cost estimate also points out that the bill reauthorizes and amends many of the discretionary programs, and creates new discretionary programs. Discretionary programs require annual appropriations. CBO estimates that implementing these programs would cost $97.4 billion over the 2008 to 2012 period.
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