KENNEDY PRAISES SENATE PASSAGE OF STUDENT LOAN BILL
WASHINGTON, DC—Senator Edward M. Kennedy, Chairman of the Senate Health, Education, Labor and Pensions Committee, issued the following statement on Senate passage of the Ensuring Continued Access to Student Loans Act of 2008:
“I’m grateful that the Senate has acted so quickly to pass this needed legislation. The bill expands federal grant and loan assistance and reduces the reliance of students on high-cost private loans. It also helps prevent the turbulence in the credit markets from blocking access by students and their families to low-cost federal loans by giving them additional options to obtain these loans,” Kennedy said. “Millions of families are facing difficult economic challenges at every turn, with this legislation, their children’s college dreams won’t become the next victims of today’s troubled economy.”
Ensuring Continued Access to Student Loans Act of 2008
(As passed in Senate)
· Increases the amount of federally subsidized loans available to students in order to reduce students’ reliance on higher cost non-federal private loans.
· Provides parents with improved access to low-cost federal loans (PLUS loans) as alternatives to private educational loans and home equity lines of credit by—
o Allowing for deferral of repayments on parent PLUS loans until the student graduates from school; and
o Ensuring parents who are impacted by the mortgage crisis can still qualify for PLUS loans.
· Ensures that students can access low-cost federal loans by stabilizing the private student loan program (FFEL program) by allowing the Department of Education to serve as the secondary market of last resort for loans originated in the FFEL program. Allowing lenders to sell outstanding loans to the Department will free up lender capital to make new loans for the upcoming school year and keep lenders from dropping out of the program.
· Ensures that students can access low-cost federal loans by shoring up the “lender of last resort” program already in law by—
o Allowing the Secretary of Education to advance capital to guaranty agencies to make these loans to students, if lenders won’t; and
o Making it easier for students to get these loans by allowing the Secretary to designate entire schools as “lender of last resort schools,” under limited circumstances where many students at a specific school are having trouble accessing loans (Senate bill sunsets this authority at the end of the 2008-2009 school year).
· Decreases students’ reliance on loans to pay for college by using savings generated by the bill to expand eligibility for need-based aid. 100,000 more students will qualify for up to $4,000 per year in additional grant aid. This provision was added to the bill by the Senate amendment.
