Washington, D.C.—Today, Representatives Carol Shea-Porter and Paul Hodes continued to stand up for New Hampshire students. In a letter to Education Secretary Margaret Spellings, Representatives Shea-Porter and Hodes requested that the Secretary take additional steps to ensure students will have access to loans.
“Middle Class New Hampshire families are struggling to pay for their children’s education,” said Rep. Carol Shea-Porter. “The cost of education is skyrocketing and there is current instability in the credit markets, so it is critical to give students and their families continued access to loans.”
“As the credit market continues to worsen, we must do everything possible to keep the dream of a higher education alive for New Hampshire students,” Rep. Paul Hodes said. “We urge the Secretary of Education to explore all possible avenues to make both public and private loans available to every New Hampshire family seeking to better their life through higher education.”
“The Federal Family Education Loan Program represents the largest federal source of financial aid for New Hampshire students,” according to René Drouin of the NH Higher Education Loan Corporation (NHHELCO). “Implementation of the Ensuring Continued Access to Student Loans Act of 2008 must ensure that nonprofit lenders, like NHHELCO, can continue to support students.”
The Ensuring Continued Access to Student Loans Act of 2008 ( ECALA) currently provides a number of resources meant to counteract the current impact the credit crisis is having on the student loan markets. However, Representatives Shea-Porter and Hodes believe further action must be taken to ensure the continued disbursement of loans made to students.
A copy of the letter is below:
The Honorable Margaret Spellings
U.S. Department of Education
400 Maryland Avenue, SW
Washington, DC 20009
Dear Secretary Spellings:
The Ensuring Continued Access to Student Loans Act of 2008 (ECASLA) provides a number of tools to be used in mitigating the impact of the current credit crisis on student loan markets. Many lenders are relying on these provisions to provide the liquidity they need to continue making student loans for the upcoming school year. While we applaud the speed with which the Department has begun working to implement ECASLA, we urge you to take further action by helping to match lenders with banks and other firms willing to provide the necessary capital to fund the initial disbursement of loans made to students.
The Department is in a unique position to facilitate these connections by establishing a clearinghouse of information to assist lenders in their efforts to connect with banks and others that are able and willing to provide short-term funding. While the implementation of the ECASLA loan purchasing provisions will provide some relief, more must be done in order to ensure that lenders, such as the New Hampshire Higher Education Loan Corporation (NHHELCO), are able to continue making new loans. The additional sources of funding facilitated by the clearinghouse would play a critical role in helping to address the liquidity issues NHHELCO, and others, are facing.
Additionally, with respect to the loan purchasing program, the 7-14 business day reimbursement time frame gives us cause for concern. While we understand that the Department anticipates the eventual shortening of this time frame, lenders such as NHHELCO, in the mean time, will find it difficult to secure the necessary capital. For example, this time frame would require NHHELCO to have about three weeks of working capital on hand, or, in their case, approximately $100,000,000. Given the current credit market conditions, this small nonprofit lender simply does not have access to this kind of capital. If the Department’s programs are to work, payments for the sale of loans and participation interests must be made available to lenders promptly (24-48 hours).
The combination of a clearinghouse and a decrease in the reimbursement time frame is critical to ensuring a successful implementation of ECASLA. We thank you for your attention to this matter, and look forward to your prompt response.