Congressman Calls on Paulson, Spellings to Aid Student Loan Market

Saying that financing education through the asset-backed securities market has become uneconomical in the current environment, a Pennsylvania Congressman has led an effort in the House to pressure two U.S. secretaries to help restore liquidity to the FFELP student program. Rep. Paul Kanjorski (D-Penn.), sent a letter to Treasury Secretary Henry M. Paulson, Jr. and Education Secretary Margaret Spellings urging them to “work without delay … to address this problem before it significantly decreases access to higher education opportunities for students and their families.” Earlier this month, Poway, Calif.-based College Loan Corp. said that it would exit the FFELP loan business, effective March 1. Also, student loan providers who relied on the auction rate markets for liquidity have faced challenges as several auctions have failed. “Recent Congressional action has decimated the Federal Family Education Loan Program, essentially making it impossible for midsized companies like College Loan Corporation to participate in the federal loan marketplace,” said CLC’s executive vice president Joanna Acoccella, according to reports. “In addition, continuing disruptions in the credit markets have compounded the impact of the legislation.” In a letter singed by 20 other colleagues, Kanjorski said that FFELP lenders have “provided the capital that has enabled tens of millions of Americans to obtain an affordable college education.”