Parents - It's Time to Speak Up!

In the president’s FY 2010 budget proposal that was unveiled this week, President Obama proposes extraordinary increases in the programs that best serve students, and takes the most important programs out of the appropriations process. It also includes some striking changes in some of the federal student aid programs--most notably, the elimination of the Federal Family Education Loan (FFEL) program--by the beginning of the 2010-11 academic year.

The budget proposal supports a $5,550 Pell Grant maximum award in the 2010-2011 school year. The Administration will index Pell grants to the Consumer Price Index plus 1 percent, in order to account for inflation in this sector. In addition, the Administration proposes to make the Pell Grant program mandatory to provide a regular stream of funding and eliminate the practice of "backfilling" billions of dollars in Pell shortfalls each year.

The FFEL program "needlessly costs taxpayers billions of dollars" and has "subjected students to uncertainty because of turmoil in the financial markets," according to the budget proposal. The president’s budget recommends the elimination of the FFEL program and the origination of all new loans through the Direct Loan program. The budget proposal estimates a savings of more than $4 billion a year, and reinvests it in aid to students. Collections and servicing of loans would be outsourced to multiple private sector contractors.

What the heck? The FFEL program did not “subject students to uncertainty because of turmoil in the financial markets” - the uncertainty came about when the auction rate security markets went in the crapper. Are we to believe that the measly $5,500 FFEL loan maximum causes stress to students and families when the average tuition is over $25,000?

The elimination of the program also means that local entities, like our valued NHHEAF Network, would no longer be handling student loans. All new loans would be originated through the Direct Loan Program. Folks, the Direct Loan Program is administered directly from the Federal Government. Do you really think the Government can handle your child’s student loan effectively and efficiently? This is a nightmare waiting to happen.

One more thing – the idea of having the loans serviced by a number of servicers will create a nightmare for your kids when it comes time to start paying these loans back. How would you like to receive multiple monthly bills for each of the loans you take out (2 per year) for each of the 4 years you went to school? Who gets paid first? Who answers your questions? Ugly, ugly.

And why it is that we continue to talk about Pell Grants, and tax credits, and loan programs, but there is never any discussion about reducing tuition costs? How is it that colleges & universities get a pass on that?

Parents – it’s time to step up and contact your Congressional delegation and make your voice heard.