Student Loan Blog : National Association of Student Financial Aid Administrators

Aid Administrators to Lawmakers: “Don’t Kill Guaranteed Student Loans”

Student Loan Girl — Wed, 25 Mar 2009 00:02:00 GMT

Just as Congress is about to vote on President Obama’s plan to end the government’s Federal Family Education Loan Program, through which families get their student loans from private third-party lenders, a lender advocacy group is urging lawmakers to consider an alternative to the president’s proposal, reports The Chronicle of Higher Education (“Student-Aid Administrators Urge Lawmakers to Reconsider Killing Guaranteed Loans,” March 19, 2009).

Currently, college students can take out student loans through private lenders using the FFEL program, or directly from the Department of Education through the government’s Direct Loan Program, which Obama hopes to establish as the sole provider of federal student loans.

Instead of doing away with FFELP lenders altogether, the National Association of Student Financial Aid Administrators proposes creating a new federal student loan model that would allow FFELP lenders to continue their participation in the federal student loan program, but under different roles.

FFEL Program Participants Would Serve New Roles

In a memo sent to Congress, NASFAA president Philip R. Day Jr. proposes that student loans be financed through the sale of government subsidized bonds to investors and that the proceeds be used to disburse student loans to colleges, who will in turn apply the funds directly to students’ accounts, similar to how direct lending functions today.

Under the NASFAA’s proposal, private lenders would no longer market college loans to students but could bid on Education Department contracts that would allow them to originate, disburse, and service the loans. Nonprofit agencies and former guarantors would no longer guarantee student loans, but would instead provide default- management services to students, including entrance and exit counseling on their repayment options.

A unique feature of NASFAA’s proposal would allow family members, friends, and private companies to receive a tax credit in exchange for paying off a portion or all of a borrower’s debt. State-based nonprofit lenders would still be allowed to offer loan-forgiveness programs for students entering in-demand professions.

Congress Urged to Consider Alternatives

Earlier last week, the NASFAA asked lawmakers to go slow when considering Obama’s plan. Lawmakers were also urged to engage in “deliberative” discussions regarding the future of student lending, The Chronicle reported, instead of just “ramming through” the government’s proposal to end the guaranteed lending program.

Obama’s plan aims to eliminate guaranteed lending for students through a budget resolution outlining the government’s spending plan.

If that resolution includes instructions to Congress’ education committees to consider Obama’s proposal by way of the budget reconciliation process, Day says it would be the death knell of the FFEL program and “prevent a full vetting of alternative proposals.”

The NASFAA has asked legislators to convene a stakeholder’s meeting to consider other viable options to reform the federal student loan program.

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Concerns About Access to Student Loans Persist, Study Finds

Student Loan Girl — Thu, 24 Jul 2008 18:42:00 GMT

Some financial aid administrators have lingering concerns that students may not be able to get the student loans they need to pay for college this year despite recently passed federal legislation designed to improve students’ access to those loans, according to a recent survey.

The survey, released this week by the National Association of Student Financial Aid Administrators, showed that NASFAA members who participated in the survey felt that the Ensuring Continued Access to Student Loans Act, HR 5715, may help to alleviate a student loan shortage in the short-term but that a long-term solution is still needed.

More than half of the financial aid administrators who responded to the survey said they had been dropped by at least one lender in the Federal Family Education Loan Program, even though that same lender is still offering student loans to other institutions. Several lenders in the FFEL program announced last spring that they would stop offering student loans to colleges with high default rates, low loan volumes, or both — a practice that 60 percent of the NASFAA members who responded to the survey say is discriminatory and should be prohibited by Congress.

Survey participants were split over the issue of private student loans, which are not backed by the federal government. About half said they thought students would have a more difficult time obtaining private student loans this year but most agreed that the private student loan market has stabilized.

The survey, however, revealed that only a quarter of financial aid administrators have a backup plan in place to handle any problems should the federal and private student loan markets face further disruptions.

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Prices of International Student Visas Set to Double

Student Loan Girl — Sat, 26 Apr 2008 01:02:00 GMT

Beginning October 1, 2008, student-visa fees will practically double in price, making it more costly for international students to study in the United States, according to an article in The Chronicle of Higher Education (“Student-Visa Fees to Support Federal Surveillance Program Could Double,” April 22, 2008).

The increased fees will affect international students applying for student, exchange-visitor, or other similar nonimmigrant visas (in categories known as F, J, or M visas). Those applying for F-1 student visas would have to pay $200, while those submitting applications for a J-1 exchange-visitor visa would need to pay $180, both up from $100.

The U.S. Department of Homeland Security is pushing for the increase to pay for upgrades to its Student and Exchange Visitor Information System, or Sevis and to pay for more program enforcement agents. The program was created in the wake of the terrorist attacks of September 11, 2001 and monitors the activity of all foreign students’ and exchange visitors’ activities.

Homeland Security officials argue that the increased fees won’t deter international students from studying in the United States since the fees represent “less than one-half of one percent of the average tuition costs for a four-year college education.”

However, college administrators argue that the increases could further add to the perception that international students are unwelcome in this country, Victor Johnson, senior public policy advisor for the National Association of Student Financial Aid Administrators, told The Chronicle.

"The problem is, if those students want to study in any other country in the world, they don't have to pay that fee," Johnson said.

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Financial Aid Administrators Oppose New Preferred-Lender List Rule

Student Loan Girl — Thu, 24 Apr 2008 01:01:00 GMT

The National Association of Student Financial Aid Administrators has asked the Department of Education to reconsider its interpretation of a new rule that requires colleges to have at least three student loan lenders that are not affiliated with each other on their preferred-lender lists, according to an article by Kelly Field in The Chronicle of Higher Education (“Aid Administrators Urge Reconsideration of Rule on Preferred-Lender Lists,” April 28, 2008).

In a letter sent to the Department of Education, NASFAA President Philip Day, Jr., expressed members’ concerns that the rule is being interpreted too broadly and “could not come at a worse time.”

Financial aid officers are presently dealing with the uncertainty about access to student loans and many have already created their preferred lender lists, which under the Education Department’s new three-lender rule would have to be revised.

With peak student loan processing season currently underway, financial aid administrators fear that the rule, expected to go into effect in July, would severely limit students’ borrowing options.

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