U.S. Secretary of Education Gives Testimony on Federal Student Loans

U.S. Secretary of Education, Margaret Spellings, testified on March 14th before the U.S. House Committee on Education and Labor hearing about “Ensuring the Availability of Federal Student Loans.” A new brochure on the subject, Federal Aid First, was also launched in order to offer more information to families and students on the availability of federal student aid. 

Secretary Spellings stated, “Of 18 million college students, more than 10 million receive financial aid from my Department.” In her statement, Secretary Spellings wanted to assure those students and their families that despite “disruptions in the private lending market,” access to federal student aid will still be available. In fact, the Department of Education has been in contact with institutions regarding accessibility to federal student loans, and “no institutions have notified us [the Department] that any eligible student has been denied access to federal loans.”

In her testimony, Secretary Spellings described steps that the Department of Education is taking together with other offices and agencies, including the Domestic Policy Council, the National Economic Council, and the Treasury. Their first step is monitoring market conditions and working with the lending community daily. This information, Secretary Spellings explained, will help the Department decide how to act should a shift in loan volume occur.

To continue to educate students, families, and schools, the Department is working to help them understand loan options. A recent letter to college presidents and financial aid officers not only reiterates the message of continued availability of federal loans, it also asks for assistance in tracking loan developments, “including any reduction of lender participation at their schools.” Should a situation arise, the Department is already reviewing options and tools available, commented Secretary Spellings.

The recently released Federal Aid First brochure will help inform students and families about the process of applying for and receiving federal aid. “Private loans can also be an important resource for students and families,” explained Secretary Spellings. “However, many who use private loans haven’t exhausted their federal aid.”

Federal Aid First answers common questions such as the difference between federal and private student loans, how much money a student can borrow, the benefits of filling out a FAFSA form, and types of federal student loans that are available. The brochure also offers the benefits of a federal student loan and tips to help students apply for the loans. Copies of the brochure can be found at www.edpubs.org.

Secretary Spellings concluded her testimony with a call to simplify the entire financial aid system during the House Committee on Education and Labor’s work to reauthorize the Higher Education Act. “As early as 2006, my Commission on the Future of Higher Education called for streamlining the entire financial aid system by addressing the interrelated issues of cost, financing, and consumer information,” Secretary Spellings stated. She described the current system as “burdensome and complex.”

“Times of economic uncertainty are all the more reason that Americans will look to higher education to acquire new skills and knowledge,” said Secretary Spellings.  Ensuring that students maintain access to federal student loans through the steps that the Department of Education is taking will help in this process.