“America’s brainpower advantage depends on our students having the opportunity to attend college. The best way for our country to pull out of an economic downturn is to expand access to higher education, not limit that access.” – Lamar Alexander
U.S. Senator Lamar Alexander (R-Tenn.) today released a statement regarding the Federal Reserve’s decision to accept government-backed student loan securities following his and the Tennessee delegation’s request that action be taken to ensure the availability of student loans:
“America’s brainpower advantage depends on our students having the opportunity to attend college,” said Alexander, former Secretary of Education. “The best way for our country to pull out of an economic downturn is to expand access to higher education, not limit that access. Since February, almost 20 of the top 100 student lenders have stopped issuing federally guaranteed student loans. Just days after the Senate passed legislation responding to this growing problem, the Federal Reserve Board has taken another important step towards ensuring that families have access to student loans to pay for college.”
On April 16th, Senator Alexander and the bipartisan Tennessee delegation sent a letter to Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke asking that they use the authority of the Federal Financing Bank to serve as a temporary backstop for outstanding student loan-backed bonds in the auction rate market.
The Federal Reserve Board today updated its policy regarding access to the Fed’s Term Securities Lending Facility. In order to inject liquidity into the student loan market, the Federal Reserve decided to accept government-backed, and AAA-rated, student loan securities as collateral. This decision will help to further stabilize the student loan market and ensure that students and their families will continue to be able to pay for college.
On April 30th, the Senate passed H.R. 5715, the Ensuring Continued Access to Student Loans Act of 2008, which would help end the lending slump by:
• Giving the Secretary of Education the authority to purchase outstanding federal loans in order to provide lenders with the financial resources needed to make new loans to students for the upcoming school year.
• Improving students’ access to “Lender of Last Resort” loans when the student is unable to secure a loan in the marketplace.
• Raising federal loan limits for undergraduate students by $2,000.
• Making it easier for parents to take out low-cost federally subsidized loans on behalf of their children through the “PLUS” loan program.
• Helping students decrease their student loan debt levels by expanding access to the existing Academic Competitiveness Grants program. Under this bill, an additional 100,000 students can receive up to $4,000 more a year in grant aid.
Yesterday, the House of Representatives approved H.R. 5715, as modified by the Senate, and sent the bill to the President for his signature. Alexander is a former Secretary of Education and is a member of the Senate Health, Education, Labor, and Pensions Committee which overseas higher education. The text of the Tennessee delegation letter to Treasury Secretary Paulson is attached.