History
History Shows: Student Loans Invest In The Future Of Our Country.
1944—Federal funding for postsecondary education began in 1944 with the Serviceman's Readjustment Act, commonly known as the GI Bill. The GI Bill was enacted to help war veterans further their educations and, in turn, increase the number of employable persons in order to strengthen the U.S. economy.
1958—The National Defense Student Loan Program (NDSL), which has since become known as the Perkins Loan Program, was created. The Perkins Loan program is a campus based program specifically targeted at low-income students with participating schools disbursing funds to students. Schools also service and collect loans. The NDSL laid the groundwork for the Guaranteed Student Loan Program created by the Higher Education Act of 1965 (HEA).
1965—Congress passed the Higher Education Act (HEA) of 1965 creating the Guaranteed Student Loan Program (GSLP), providing funding for federal financial aid programs and encouraging college enrollment. The portion of the HEA that deals specifically with student financial aid programs is Title IV—Financial Aid Programs.
The HEA has been amended several times and is subject to periodic reauthorization. Such legislation is generally effective for five years at a time, at which point Congress reviews it prior to its scheduled expiration. The current version of the HEA is scheduled to expire on September 30, 2003 with an automatic extension in place until September 30, 2004.
1980—Parent Loans for Undergraduates (PLUS) were introduced allowing parents of dependent undergraduate students to have low-interest loans to pay for their children's college education. In the same year, Congress created the loan consolidation program so that borrowers could consolidate multiple loans into a single loan with a longer repayment term and smaller monthly payments.
1988—Guaranteed Student Loans were renamed Stafford Loans in honor of Senator Robert Stafford of Vermont.
1989—Student Loan borrowers were first required to receive financial counseling from schools before borrowing.
1991—Congress prohibited schools with high default rates from participating in the Guaranteed Student Loan Program.
1992—Guaranteed Student Loan Program was renamed the Federal Family Education Loan Program (FFELP) in the 1992 HEA reauthorization. Today, FFELP is a public-private partnership that provides affordable private sector financing for students and their families seeking postsecondary education.
1993—After one year as a pilot program in the 1992 HEA reauthorization, the Federal Direct Loan Program (FDLP) became a full-scale program in 1993. In FDLP, loans are financed by the federal government.
2003 (and beyond)—Federal student loan programs play an important role in making postsecondary education a reality for millions of Americans. In fiscal year 2002 more than 11 million loans valued at over $40 billion were made to students and their families under federal student loan programs.
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