2008-09-08 23:52:02 -

- A just-completed regional survey reveals that students and parents experienced little or no problems accessing federal students loans for this fall, despite the past summer's sub-prime lending crisis and attendant worries about the availability of college loans.

The survey, jointly sponsored by the New England Board of Higher Education (NEBHE) and The New England Council, asked financial aid officers from 214 of the region's colleges and universities to assess the impact and effectiveness of the federal government's response earlier this year to the student loan problem.

The U.S. Department of Education provides the largest source of student aid for higher education in the country through loans, grants and other plans. The Federal Family Education Loan Program (FFELP)

is the largest student loan program, consisting of Stafford, PLUS loans for parents and Consolidation Loans. FFELP loans involve private lenders making student loans guaranteed by the federal government. Because of their inability to raise the capital needed to make those loans, a number of lenders quit the program, with others no longer offering loans to higher-risk students.

The "Ensuring Continued Access to Student Loans Act of 2008" enacted in May was designed to allow the Department of Education to provide lenders with the capital to continue making FFELP loans, reduce borrowers' reliance on costlier private college loans by increasing the total loan limit over the course of a student's education, give parent-borrowers more time to begin paying off their federal PLUS college loans, and help struggling families to pay for college by relaxing certain credit-history requirements.

U.S. Rep. John F. Tierney (D-Mass.), one of three New Englanders serving on the House Education and Labor Committee, which had jurisdiction over the legislation, was briefed on the survey results on Thursday, Sept. 4.

Among the survey findings:

-- There have been no major concerns about the availability or adequacy of FFELP loans for fall 2008

-- There have been large increases in the volume of unsubsidized Stafford loans

-- There has been a distinct shift and increase in applications for parental PLUS loans, compensating for the contraction in the availability of private/alternative loans

-- New features of the PLUS loans, including deferment options, have made these loans alternatives to private loans.

"I would like to thank the New England Board of Higher Education and the New England Council for conducting this survey and showing strong leadership in the area of higher education. Their work will play a significant role in our ability to assess the impact of recent legislation. I appreciate all they have done to advance the issue, and I look forward to their continued work as it will undoubtedly also help inform the Committee's direction on this issue as we look to the next academic year's challenges," said Tierney.

Michael K. Thomas, NEBHE interim president and CEO commented "we are pleased to find that there have been no widespread concerns about the availability or adequacy of federal loans for students and parents for fall 2008. While there have been instances in which students' fall enrollment has been impeded due to inadequate loan availability, these appear to be the exception. However, there is ongoing uncertainty and concern about the availability of federal and private loan funds in early 2009 and in the next academic year, fall 2009."

New England Council president and CEO James Brett thanked Tierney for his key role in drafting the law and the members of New England's delegation who supported the legislation. "It was extremely important for Congress to act quickly and effectively to address this issue, and they did. In a little more than two months the law was enacted and the Department of Education was moving forward to make it work", said Brett. "The Council will continue to work on this issue with NEBHE, Congressman Tierney and our New England delegation."

A report summarizing survey results is available from NEBHE online at www.nebhe.org.

The New England Board of Higher Education is a nonprofit, interstate agency whose mission is to promote greater educational opportunities and services for the residents of New England.

The New England Council is an alliance of large and small companies, educational institutions, nonprofit and other agencies dedicated to promoting economic development and a high quality of life in the six-state region.

The New England Council
David O'Donnell, 617-723-4009
or
New England Board of Higher Education
Charlotte Stratton, 617-357-9620 x125