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Baucus,
Tester send ‘wake up call’ to protect student loans
Senators urge
Bush Administration to ‘steer us away’ from future crisis
(WASHINGTON,
D.C.) – Montana U.S.
Senators Max Baucus and Jon Tester have joined 18 of their colleagues to
send a wake-up call to the Bush Administration, demanding a preemptive
fix to protect student loans.
The
bipartisan group of senators sent a letter to the Education and Treasury
Secretaries, asking them to “make full and immediate use of your existing
authorities to help steer us away from the impending crisis.”
Most
of Montana’s
student loans come from the Federal Family Education Loan Program
(FFELP). These loans are financed by bonds traded on Wall Street.
In a shaky economy investors are less likely to buy bonds, resulting in
higher interest rates.
The
Montana Higher Education Student Assistance Corp., which oversees student
loans in Montana,
relies on FFELP loans. Financing to be used for student loans for
the upcoming academic year has already been secured, so the problem won’t
affect Montana
this year. But Baucus and Tester say it’s time for some long-range
planning to avoid a collapse in the future.
The
Senators want the Bush Administration to take action to make sure middle
class families have access to student loans no matter what happens to the
economy.
“We
urge you to use the authority of your departments to provide a solution
which will ensure access to student loans and help keep the cost of education
finance as low as possible,” the Senators wrote.
Both
Baucus and Tester also noted the government’s recent $30 billion bailout
of troubled investment bank Bear Stearns.
“This
is a wake-up call for the Bush Administration,” Baucus said. “It’s
a fair request from a lot of folks on both sides of the aisle. They
need to do what they can now so we can avoid an expensive fix in the
future.”
“We
saw the government step in to protect a Wall Street bank,” Tester
said. “Working families need the Administration to step in to make
sure Montana
college students don’t see their aspirations fall apart because of a lack
of effort on the part of the government.”
The
Senators’ letter to U.S. Treasury Secretary Henry Paulson and U.S.
Education Secretary Margaret Spellings:
Dear
Secretary Paulson and Secretary Spellings:
In
the past several weeks it has become clear that we are entering a period
of urgency regarding access to student loans. American families
have begun to feel the crunch of the higher education funding crisis
which began with the sub-prime mortgage setbacks and subsequent capital
market difficulties. The Federal Family Education Loan Program
(FFELP), which initiates eighty-percent of our nation’s student loans,
relies heavily on this market and the severe liquidity problems therein
have created a credit vacuum which directly impacts students in our
states.
The
U.S. Department of Education projects that nearly $60 billion in new
FFELP loans will be needed for 6.7 million borrowers this academic year.
American families rely heavily on this financing and we urge you to use
the providence and authorities of your departments to provide a solution
which will ensure access to student loans and to help keep the cost of
education finance as low as possible, in a way that is the least
disruptive to students or schools. We remain hopeful that you will
make full and immediate use of your existing authorities to help steer us
away from the impending crisis.
We
stand prepared to assist in any capacity necessary and look forward to
hearing what action you plan on taking to assure middle-class families
that access to student loans will not be an obstacle to their children’s
educational aspirations.
Sincerely,
B.
Nelson, Burr, Bingaman, Enzi, Johnson, Alexander, Salazar, Roberts, Webb,
Grassley, Tester, Isakson, Baucus, Thune, Lincoln,
Hatch, Pryor, Sununu, Landrieu, Murkowski
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