This is the FFELP d-day. If there is no budget reconciliation passed before or on this day then FFELP is not going anywhere for at least another year. The House has already passed the bill needed to eliminate FFELP. Now all eyes are watching the Senate.
There is a healthy sense of optimism within the FFELP community. Because health care reform is such a high priority topic, FFELP has been pushed to the side. While Congress works on hammering out a health reform bill that will satisfy Americans, FFELP continues chugging along in the silent background, ever closer to the deadline.
While overall budget reconciliation is an important focus to keep in mind, relying upon elimination of the FFELP program for savings has proven shaky ground. Initial government savings estimates topped $80 billion. However the review commission realized they had neglected to include the higher volume of defaulting student loans into their calculations, a total which left the estimate topping $40 billion instead of $80 billion.
Still, proponents of FFELP elimination still quote the $80 billion figure when justifying their claims. Opponents of the measure point to the massive job losses predicted should FFELP go away, as well as the students who would suddenly be caught in disbursement limbo. Thousands of students would experience dual servicing as their older loans will remain with their older lenders and any new loans would sit with the Department of Education. This discrepancy is a recipe for default. As more confusion permeates an already confusing system, more and more students will contact their schools with questions. This will overburden already strained financial aid staff with an influx of student callers with justified questions which lack an easy answer.
Remember, please contact your Congressman as soon as possible with your opinion on this important matter! We want to make sure that every voice is heard in the ongoing battle to save FFELP.
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