|
The Guarantor of Choice SM |
TG's Legislative Report
May 17, 2005
TASFAA, ATLE, TG Memo
The following memorandum concerning the HEA reauthorization was sent to the Texas Congressional Delegation. This was followed up with visits to 12 offices for meetings with Members and staff on April 27th and April 28th.
April 27, 2005
| TO: | Members, Texas Congressional Delegation |
| FROM: | Sue McMillin, President and CEO Texas Guaranteed Student Loan Corporation (TG) (512) 219-4949 sue.mcmillin@tgslc.org Pat Jost, President Texas Association of Student Financial Aid Administrators (TASFAA) (512) 999-8315 Patricia.jost@trinity.edu Phillip Wambsganss, President Association of Texas Lenders for Education (ATLE) (817) 265-9158 phillipw@nthea.com |
| RE: | Texas' Student Financial Aid Community's Positions on the Reauthorization of the Higher Education Act |
On behalf of the Texas Guaranteed Student Loan Corporation (TG), the Texas Association of Student Financial Aid Administrators (TASFAA), the Association of Texas Lenders for Education (ATLE), and the entire student financial aid community in Texas, we would like to submit to the 34 Texas Congressional offices the Higher Education Act (HEA) reauthorization positions of the Texas student financial aid community.
First, we strongly encourage the Delegation to support, and encourage the enactment of, the recommendations put forward by your Advisory Committee on Student Financial Assistance. In its January 2005 report titled The Student Aid Gauntlet — Making Access To College Simple And Certain, the Committee recommends several initiatives e.g., creating a system of early outreach on student financial aid and college costs, reforming the treatment of certain assets in determining eligibility for student financial aid, expanding student and family assets, expanding the automatic zero Expected Family Contribution to more students, allowing early application for student aid, creating an EZ FAFSA for low-income students, and creating a national partnership to make access simple and certain that builds on existing state models like the Closing the Gaps effort in Texas.
The report is available at www.ed.gov/about/bdscomm/list/acsfa/edlite-gauntlet.html.
Second, we encourage the Delegation to support HR 508 — the FED UP Higher Education Technical Amendments Act of 2005, HR 609 — The College Access and Opportunity Act of 2005, and HR 1293 — the Access and Equity in Higher Education Act of 2005. While there is other legislation that concerns aspects of the HEA reauthorization, these three House bills encompass the major topics that need to be enacted as soon as possible.
On the subject of student loan consolidation, the Texas student financial aid community believes that student loan consolidation issues should be reviewed thoroughly. The following should all be considered: the original purpose, benefits, and conditions of the 1985 program; the program's cost to lenders and holders; the parity between the Federal Family Education Loan Program and the Federal Direct Loan Program; the balance between the increased federal costs of the consolidation loan program and the need to increase other federal student financial aid programs for current students; and, most importantly, the appropriate level of taxpayer subsidization for consolidated student loans after the borrower leaves school.
Additionally, the Texas student financial aid community wholeheartedly endorses, in addition to the reauthorization of Titles III, IV, and V included in the above mentioned bills, the Section 487 — College Access Initiative in HR 609 that promotes early awareness, outreach, and the dissemination of consumer information about postsecondary education. These provisions are in line with aspects of our state initiative in Texas called Closing The Gaps, which includes regional training and outreach centers, a toll-free Texas Financial Aid Information Center information line (888-311-8881), and a bilingual Internet web site (www.collegefortexans.com).
In particular, the Texas student financial aid community endorses the following provisions included in the three aforementioned bills:
- Making the Pell Grant Program available to students attending college year round. This is an important issue in Texas as we try to enroll more students — particularly students from underrepresented populations — and, at the same time, identify ways to encourage students to complete their degree programs in four or five years. This proposal, if enacted, will help this effort, as well as the persistence and graduation of students.
- Repealing the tuition sensitivity in the Pell Grant Program so that all eligible students may receive the same maximum grant.
- Repealing the student loan origination fee in both the FFELP and Federal Direct Loan Program. It is time to begin phasing out this "temporary fee" established in a budget bill in 1981.
- Establishing an interest-only, two-year repayment plan option for borrowers who may have difficulty in meeting their repayment obligations.
- Renewing the expired exemption of the 30-day delayed disbursement requirement and the multiple disbursement requirements for schools with a default rate of 10 percent or less for the last three fiscal years for which data are available.
- Changing interest rates to provide a market-based variable interest rate for all Stafford, PLUS, and Consolidation loans. If this change is enacted, all borrowers will be treated equally — benefiting when interest rates are low and paying higher rates when rates increase to a potential maximum of 8.25 percent. The change for Consolidation loans will also help to return the Consolidation Loan Program to its original intent when it was created by the Congress in 1985.
- Increasing the annual and aggregate subsidized Stafford loan limits for first- and second-year students in both the FFELP and Direct Loan Program.
- The expansion of student loan repayment options in HR 1293 which will standardize these options and simplify the administration of the loan programs.
- Reauthorizing Section 428A — Voluntary Flexible Agreements with Guaranty Agencies, originally enacted during the last HEA reauthorization, and which has resulted in increased productivity, effectiveness, and efficiencies in guarantor operations.
- Reauthorizing the Title IV campus-based student financial aid programs and increasing the authorized annual amounts, i.e., SEOG, Perkins, and Work-Study programs.
- Phasing out the Section 413(D) ALLOCATION OF FUNDS formula for campus-based student financial aid programs. This statutory formula has been in place for 25 years and was last updated 10 years ago. Consequently, the formula allocates funds based, in large part, on when an institution began participating in one of the campus-based programs and in which state the institution is located. Population growth patterns and institutional missions are not considered. The provisions in HR 609 would gradually reduce the "base guarantee" protection currently granted to certain institutions, thus freeing up additional dollars to be distributed to all eligible institutions, ensuring that the allocations will be equitably distributed to the neediest students at all participating institutions across the nation.
On a related topic, HR 1425 — The Student Aid Reward Act — proposes to increase grant funds for students attending institutions that choose to participate in the lower cost of the two major student loan programs (Federal Family Education Loan Program or the Federal Direct Loan Program). The Texas student financial aid community, while recognizing the need for increased need-based aid for postsecondary education students, is of the opinion that this bill is the wrong approach to accomplishing this objective. Not only will the bill add confusion to the student aid system (contrary to the Congress' own Advisory Committee's recommendations to simplify the application and delivery systems) with some students participating in one program and some in the other, the legislation ignores major factors, e.g., training, outreach and awareness, borrower benefits, etc., that are important to students and institutions, as well as the potential increased costs to the institutions of moving from a public-private partnership to a full publicly funded and administered program.
On a final note, the Texas student financial aid community is strongly opposed to any proposal that seeks to weaken one of the two major student loan programs in order to benefit the other. Section 451(b)(2) of the HEA states that "…loans made to borrowers under this part…have the same terms, conditions, and benefits as loans made to borrowers under Section 428…" Congressional intent is clear and we urge the Delegation to continue to support, as much as possible, the continuation of a fair and competitive student loan market that allows postsecondary institutions to choose the program that provides the best customer service and support in meeting the needs of students and institutions. In Texas, the federal student loan programs provide two-thirds of all direct student financial aid awarded annually to students, a far higher percentage than the national average. Therefore, it is vitally important that this source of financial aid be supported and strengthened.
In conclusion, we recognize the budget parameters the Congress is working within and applaud the leadership and members of the House Education and the Workforce Committee for crafting legislation that addresses the important issues associated with the reauthorization of the HEA in a fair and bipartisan manner given the constraints.
As you can see, the Texas student financial aid community has done a good deal of work and is prepared to assist you and your staff in any way you deem appropriate. We want to be a resource and sounding board. The Texas student financial aid community is pleased to provide these comments to you, and urge you to consider our input. We look forward to continuing to provide input as the HEA reauthorization process continues, invite your questions and requests for further information, and thank each of you for your past and future support.
Thank you for your consideration.
TG Sunset Advisory Commission Review Update
The House of Representatives passed TG's Sunset bill, HB 2274, on April 19th and the Senate passed the bill on May 12th. The Governor can sign the bill into law, or allow the bill to become law without his signature on May 28th.
TG Congressional and Legislative Relations
(512) 219-4503
P.O. Box 83100
Round Rock, TX 78683-3100
|
© 2008 Texas Guaranteed Student Loan Corporation |
|