No More Guaranteed Student Loans?
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Del.icio.usNational Association of Student Financial Aid Administrators fears that Congress is ready to pass legislation that would end the guaranteed student loan program.
In a letter to its members sent today, the association suggests a new federal loan model that would keep all the current participants in the student-loan system but assign them different roles.
Under the group’s plan, student loans would be financed through government-backed bonds purchased by private investors and ordinary Americans. Proceeds from the sale of the bonds would be disbursed to borrowers through their colleges and applied directly to students’ accounts.
While banks would no longer market loans to students, they could bid on Education Department contracts to originate, disburse, and service the loans. Guarantors and other nonprofit agencies could bid on contracts to provide default-management services, including entrance and exit counseling, but they would no longer guarantee loans.
Congress is expected to vote next week on a budget resolution that will pave the way for spending this year. This could spell further troubles for students who are having difficulty getting financial aid.
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Editor: Melissa Steele is a freelance writer and focuses her research on funding for higher education. She is a graduate of UNLV and endeavors to keep her readers up to date with the most relevant education information.