Last month the U.S. House of Representatives approved emergency legislation aimed at averting a crisis in student lending. As students gear up to attend college in the fall, the bill attempts to reassure them that the federal government will help if private lenders continue to leave the student-loan program.
For several weeks now, dozens of private lenders have announced they will no longer participate in the government-backed loan program. Through this program, the government uses subsidies and repayment guarantees to encourage lenders to offer loans to students at below-market rates. Last September Congress voted to cut about $20 billion from these subsidies – and lenders blame this move, along with the credit crunch and mortgage crisis – for driving up their costs and making participation in the program less affordable.
The student loan bailout bill would (among other provisions):
• Allow the secretary of education to purchase loan portfolios that lenders have struggled to sell to investors;
• Ease the process of applying for a student loan and allow the secretary to identify “lenders of last resort;” and
• Raise the limits on the amount undergraduate students can borrow in federal loans, which will reduce the borrower’s dependence on other private and usually costlier loans.
The bill was passed by the Senate and is expected to be signed into law this week by President Bush.
Becky H. Timmons, assistant vice president for government relations at the American Council on Education said “If enough people buy umbrellas, we might be able to ward off a storm.”
Given that the bill has now gone to the president, Congress will turn its attention to the conference committee working to negotiate the final version of the Higher Education Act (HEA) reauthorization. In the meantime the Senate voted just last week to extend the act through May 31.
In other news…..
• Senator Jim Webb (D-Va.) and other supporters of better educational opportunities for veterans are pushing for more generous benefits under the GI Bill. The prospect for enactment is unclear at this time because of its substantial price tag.
• The Department of Education has issued a number of proposed regulations governing the Family Educational Rights and Privacy Act (FERPA) in the areas of disclosures in health and safety emergencies.
• The proposed regulations would also prohibit the disclosure or confirmation of a student’s directory information without the student’s prior written consent if a SSN or other non-directory information is used to identify the student.
• The U.S. Department of Homeland Security has released a proposal that would increase the Student and Exchange Visitor Information System (SEVIS) fees by up to $200 per application. The fees would help to financially support SEVIS, and would apply to international student visa holders (F,J, or M visas.)
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