Press Release

WASHINGTON, DC – February 25, 2004 – Ten more higher education associations are adding their support for greater student access to higher education by joining the Coalition for Better Student Loans, a group of higher education and lending organizations working together to improve the Higher Education Act. The Coalition has submitted to Congress and the Bush Administration a package of major proposals designed to make higher education more accessible and affordable for millions of Americans.

Joining the higher education associations that helped create the Coalition are:

• Accrediting Association of Bible Colleges
• The American Association of Presidents of Independent Colleges and Universities
• Association of Independent Colleges of Art and Design
• Council for Christian Colleges & Universities
• Council of Independent Colleges
• Division of Higher Education, Christian Church (Disciples of Christ)
• The Foundation for Independent Higher Education
• National Association of Schools, Colleges, and Universities of the United Methodist Church
• North American Division of Seventh-Day Adventists
• United Negro College Fund

The Coalition for Better Student Loans is a partnership of financial aid administrators, parents, loan providers and organizations representing more than 2,000 colleges and universities. The Coalition is asking Congress to takes a series of steps that will increase access to higher education for more low- and middle-income students. The Coalition has developed a five-part proposal that would lower the cost of borrowing when students go to college , ensure adequate funding to meet educational expenses while enrolled, and make it easier to repay loans after graduation.

Members of the Coalition unanimously support increased grant aid. Recognizing, however, that increases in grant aid are not likely to be adequate to meet the financial needs of all students, the Coalition recommends providing relief from origination fees, increasing Stafford loan limits, offering more flexible repayment options, maintaining a viable loan consolidation program and extending loan forgiveness to borrowers in high-need occupations. To minimize unnecessary borrowing, the Coalition proposes giving schools flexibility to set lower loan limits for their students.

Specifically the Coalition is calling for Congress to:

• 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.

• 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. Students as a result borrow from other, more costly sources to fund their education or work excessively long hours. 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. The Coalition also recommends increasing loan limits for graduate and professional students. Importantly, to minimize unnecessary borrowing, the Coalition proposes giving schools flexibility to set lower loan limits for entire groups of students.

• 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.

Fuller summaries of the legislative proposals and other information, including public opinion surveys, are available at www.betterstudentloans.org .

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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.

Contacts at founding member organizations: