Update on Student Loan Reform: A Long Summer Ahead
Where does the progress of student loan reform stand? A budget resolution has passed both houses of Congress, and reconciliation will occur. But the future is unclear—many twists and turns await on the legislative road ahead.
According to the reconciliation process, the House Education and Labor and the Senate Health, Education, Labor, and Pensions (HELP) committees must find $1 billion in savings, over the next 5 years, in the current federal budget by October 15. While the reconciliation process does not have the power to delete programs from the budget, the recommendations of these committees will shape the composition of a proposed 2010 – 11 budget that will be written by Congress, debated, and voted on in the fall.
In the meantime, a great debate rages about the federal government’s spending priorities—including the direction of the federal student loan program. Some in the student loan community, in particular, have begun a lively discussion about how to best serve students while also investing taxpayer funds wisely, preventing the loss of local jobs, and keeping competition alive.
Certainly, eliminating the federal subsidies to private lenders as the Obama Administration has proposed would be one way to contribute toward the necessary savings. But Congress is also assessing and budget-scoring several other proposals put forth by the student loan industry that suggest alternative program models for a year while the reform details are ironed out.
And here’s an added wrinkle—the popular assumption is that the committees will realize the reconciliation savings through the elimination of lender subsidies. However, reconciliation instructions do not mandate how the savings must be found; the committees have the latitude to make cuts in any of the programs they oversee, such as health, labor or pensions. Congress could vote to extend ECASLA for a year while the reform details are ironed out.
Regardless of what lies ahead, ASA believes that protecting borrowers through education debt management must remain a top priority in the federal student loan program. While Congress deliberates amid a sea of opinions, ASA will continue to advocate passionately on behalf of making education debt management an entitlement for all borrowers, no matter where their loans come from.
Posted by Shelley Saunders on May 19, 2009 at 09:17 AM EST
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Blog Author
Shelley Saunders
Vice President, Strategic Services
Biography
In her current role as American Student Assistance’s vice president of Strategic Services, Shelley Saunders serves as the organization’s primary contact for Congress, as well as for national organizations such as the American Council on Education, the American Association for State Colleges and Universities, the National Association of Student Loan Administrators (NASLA), and others. Her main focus is to educate the public policy making community on the positive results American Student Assistance has realized through its focus on student loan borrower financial Wellness.
In her 12-year career at American Student Assistance, Saunders has played an integral role in several of the organization’s global projects, including designing a new client-server based life-of-the-loan processing system and developing corporate strategy and tactics. She most recently held the position of vice president of Borrower Services.
Saunders has appeared on numerous Clear Channel radio broadcasts in the Washington, D.C. area. Her areas of expertise include the public purpose role of federal student loan administrators, as well as general facts about student loan origination and repayment.
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