College Costs for Millions to Worsen Under Senate Proposal

WASHINGTON, DC, June 19, 2007—The following statement was released by Kevin Bruns, executive director of America’s Student Loan Providers, in response to the proposed Higher Education Access Act of 2007, which is expected to be considered tomorrow by the Senate Health, Education, Labor and Pension Committee:

The totality of the cuts proposed by the Higher Education Access Act of 2007 would make college more expensive for millions of middle class families, create more anxiety for families already struggling with skyrocketing college costs and impose an unworkable, untried auction system on parent borrowers and schools. 

“Up to 6.1 million students and parents would almost certainly see their loan costs increase, as the proposal’s $18.3 billion cut makes student loans uneconomical for most lenders. Lenders who remain in the program would be forced to reduce discounts on rates and fees and levels of service.  

“Section 801 would impose an unworkable, untried auction system on parent borrowers and schools. No longer would parents have a choice of lenders: The government would decide for them who their lender is. The lowest bid would trump service reliability and quality every time, leaving borrowers and schools to pick up the pieces. 

“Auction proposals have been studied in the past and found wanting. Its supporters offer no evidence--academic, empirical or analytical--why this proposal is any different. 

“Given the significant contribution that the private sector makes to the success of the federal student loan program, this ought not be the last word on these budget cuts.  As the bill works its way to the floor, the student loan community looks forward to working with members of Congress to perfect the proposal--to ensure it's in the best interests of borrowers and the nation.”

###

America’s Student Loan Providers represents 89 of the nation’s leading private, nonprofit and state-based education and financial organizations that provide guaranteed student loans through the Federal Family Education Loan Program. By leveraging private financial markets and competing for the right to lend to students, ASLP members offer low-cost loans to millions of students and superior levels of service to most of the approximately 5,000 postsecondary institutions that participate in FFELP. More information is available at www.aslp.us or call 202.721.1190.