Press Release

COALITION OF SCHOOLS, PARENTS AND LOAN PROVIDERS ISSUES
RECOMMENDATIONS FOR BETTER FEDERAL STUDENT LOANS

WASHINGTON, Sept. 2, 2003 – A unique coalition of financial aid administrators, parents, loan providers and organizations representing more than 2,000 colleges and universities today proposed a five-part plan to increase access to higher education by bolstering the federal student loan program.

The group, The Coalition for Better Student Loans, has sent its proposal to Congress, which is beginning debate on the reauthorization of the Higher Education Act. The recommendations include increasing Stafford loan limits, providing relief from origination fees, offering more flexible repayment options, maintaining a viable loan consolidation program and extending loan forgiveness to borrowers in certain occupations.

The Coalition also released the results of a survey of likely voters that showed overwhelming support for federal student loans, and strong backing for enhancing the program.

"Getting a college degree is today's ticket to the American dream," said Jim Boyle, president, College Parents of America. "Our coalition has banded together to support a single common goal -- to ensure that every student who dreams of pursuing a college degree has the financial tools they need, regardless of their personal financial circumstances."

“ We all recognize that the ideal option would be to increase grant aid to all students who have a financial need,” said Dallas Martin, president, National Association of Student Financial Aid Administrators. “However, limited federal budget resources will mean a continued need for federal student loans. Fortunately, we have a vibrant and successful program. Today we recommend some important steps to bolster that program.”

The Coalition's Recommendations

	Increase Stafford loan limits: Borrowing limits on federal student loans have not changed since 1992 and freshman loan limits have essentially been unchanged since 1972. The result of these outdated limits is considerable evidence that students are increasingly forced to take other measures to fund their education, including working longer hours and taking out other types of loans that offer less favorable terms. The Coalition proposes increasing loan limits in each of the first two years of postsecondary education and creating "flexible borrowing accounts" for the remainder of undergraduate study (see chart attached). The Coalition also recommends increasing loan limits for graduate and professional students. To minimize unnecessary borrowing, the Coalition proposes giving schools flexibility to set lower loan limits for entire groups of students.
	Provide origination fee relief: The origination fee was established as a temporary measure in 1981, yet 20 years later it is still being charged to students. The Coalition proposes providing relief for all students from this education tax, but at a minimum the group recommends targeting such relief to subsidized Stafford loan borrowers.
	Provide more flexible repayment options: Student loan borrowers generally have 10 years to repay their student loans under federal law. The current repayment options can result in unmanageable monthly payments for some borrowers first entering the workforce. The Coalition proposes three options for these borrowers: Targeted assistance to these borrowers through an interest-only plan (borrowers pay only the amount of accruing interest for two years);     A partial interest plan (borrowers with high debt and modest income would pay only 50 percent of the interest for two years); and     Expansion of the current extended repayment concept.
	Maintain a viable loan consolidation program: Loan consolidation was originally created by Congress to simplify the process of loan repayment for borrowers with multiple lenders and to help lower monthly payments for borrowers in difficult financial circumstances. The Coalition supports use of consolidation loans for those original purposes. Student loan consolidation was never intended to be a refinancing mechanism. The Coalition opposes proposals to permit consolidated loans to be refinanced because it would drain crucial federal resources needed for incoming or current students. The Coalition proposes: Creating a consolidation interest rate structure that tracks the Stafford loan program;     Retaining the single holder rule;     Closing the Perkins loan consolidation loophole to prevent circumvention of the single holder rule (Perkins Loans should continue to be included in consolidation loans. However, some consolidation firms treat the school as a separate "loan holder" to get around the single holder rule. Congress needs to clarify the existing law.); and     Charging a fee to consolidation borrowers, if necessary, to offset the cost of student loan improvements.
	Extend loan forgiveness to those working in certain highly needed occupations: Borrowers leaving school with significant debt should have some relief if they enter lower paying, high-need career fields such as teaching in low-income areas. The Coalition proposes Congress provide $1 billion in funds for such loan forgiveness programs.

"With their below-market interest rates, federal student loans offer low- and middle -income students the opportunity to invest in themselves regardless of their credit history," said Brett Lief, president, National Council of Higher Education Loan Programs. "Compared to interest rates on unsecured consumer credit, the value of federal student loans to a student who has no credit history, no co-signer and no chance for a private loan is virtually ‘priceless.’”

Survey Results

The Coalition also commissioned a survey of 800 likely voters, conducted by Public Opinion Strategies and Hart Research. The findings include:

	83 percent feel the federal student loan program is more important today than it was a few years ago.
	88 percent say Congress should increase the current maximum Stafford loan limits so that students and their families can borrow more money to pay for college.
	81 percent support offering greater financial assistance to current and future students, as opposed to those who have graduated college.

Fuller summaries of the legislative proposals and the survey are available at www.betterstudentloans.org.

“The coming together of this coalition shows the overwhelming support among our members for increasing access to higher education,” said Joe Belew, president, Consumer Bankers Association. “As an industry, we owe it to students to ensure the federal student loan program fully serves their needs."

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The Coalition for Better Student Loans is a group of financial aid administrators, parents, loan providers and organizations representing more than 2,000 colleges and universities which are working together to improve the federal student loan program and increase access to higher education for more students. The group is composed of the American Council on Education (ACE), Association of American Universities (AAU), College Parents of America (CPA), Consumer Bankers Association (CBA), Education Finance Council (EFC), National Association of Independent Colleges and Universities (NAICU), National Association of State Universities and Land-Grant Colleges (NASULGC), National Association of Student Financial Aid Administrators (NASFAA), National Council of Higher Education Loan Programs (NCHELP), and Sallie Mae. More information is available at www.betterstudentloans.org.

Contacts at member organizations:

ACE: Timothy McDonough (202) 939-9365
AAU: Barry Toiv (202) 408-7500
College Parents of America: Jim Boyle (703) 797-7103
CBA: Harrison Wadsworth: (202) 289-3903
EFC: Joanna Acocella: (202) 466-8621
NAICU: Tony Pals: (202) 739-0474
NASULGC: Richard Harpel (202) 478-6040
NASFAA: Dallas Martin or Larry Zaglaniczny (202) 785-0453
NCHELP: Karen Lanning (202) 822-2106
Sallie Mae: Tom Joyce: (703) 810-5610

Financial Aid Administrator Contacts:

Catherine Breuer, Normandale Community College (South Bloomington, MN): (952) 487-8243
Youlonda Copeland-Morgan, Harvey Mudd College (Claremont, CA): (909) 621-8055
Karen Fooks, University of Florida: (352) 392-1271
Myron L. Hanson, The University of Montana: (406) 243-5504
David Myette, Champlain College (Burlington, VT): (802) 865-6430
Christine Zuzack, Indiana University of Pennsylvania: (724) 357-2218

Parent Contacts:

Bud & Mary Breheney (Newburgh, NY): (845) 565-0129
Ms. Pat Williams (Detroit, MI): (248) 642-7308
Ms. Bridget Czapiewski (Alexandria, VA): (703) 780-5987

Student contacts:

J.P. Benedict, Student Body President, Associated Students of the University of Arizona: (520) 621-2782
Robin Cook, National Issues Director, Associated Students of the University of Missouri: (573) 882-2701 or (573) 268-2606
Jason Redd, elected student representative, Board of Governors, Rutgers University: (732) 991-2516