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Student loan availability top priority
CUMBERLAND - The U.S. Department of Education has taken steps to ensure that all qualified college students have access to federal student loans for the coming school year.
The department recently announced a commitment to purchase new federal loans for the 2008-2009 school year.
Its plan includes a commitment to continue working with the lending community to explore ways to re-engage capital markets; a strengthened lender-of-last-resort program to help insure students against shifting market forces; and a direct loan capacity which, if needed, could increase the direct loan origination volume from $15 billion to $30 billion.
"This is something we are dealing with every day. I do believe that the Department of Education is doing the best it can with the resources it has, but this is only a one-year fix," said Angela Hovatter, director of student financial aid for Frostburg State University. "I hope Congress takes a more careful look at the effect that the changes in its rules are having on students, especially those from middle-income families who must rely on loans to get through college."
One of the problems with the current student loan market is lenders not having access to funds at a cost that justifies originating new loans. The U.S. Department of Education and the U.S. Treasury have been working together for the past several months to devise a plan.
Department of Education Secretary Margaret Spellings sent letters to Federal Family Education Loan lenders advising them of the new plan.
"We want students to be able to concentrate on their studies rather than worry about disruptions in the student loan market and whether they will be able to obtain federal loans to help pay for school. We hope families will be reassured that the U.S. Departments of Education and Treasury are acting to ensure loans remain accessible," said Spellings. "At the same time, while offering these short-term solutions, we can also consider this a teachable moment that speaks to broader, long-term flaws in our complex and outdated financial system. This system has been crying out for reform for years, and especially in light of the ever-increasing cost of higher education, students and families are counting on us to provide it."
"I am confident that the department of education has designed a program that will facilitate the origination of new FFEL loans for the upcoming school year," said Secretary of Treasury Henry Paulson. "This program should ensure that the market works for students needing loans this school year, and we at Treasury are committed to continuing our work with our colleagues at education and the FFEL Lenders to find a longer-term solution. I believe that the key here is getting the capital markets to restart and make funds available to FFEL lenders on terms that reflect the high-quality student loan assets."
For more information on the components of the plan, log onto www.ed.gov/students/college/aid/loans.html.
Contact Jennifer Raley at jraley@times-news.com.
