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Summary

Federal student loans are made available under two major loan programs authorized under the Higher Education Act (HEA) of 1965, as amended: the Federal Family Education Loan (FFEL) program, authorized by Title IV, Part B, of the HEA; and the William D. Ford Federal Direct Loan (DL) program, authorized by Title IV, Part D, of the HEA. Under the FFEL program, private lenders make loans and the federal government guarantees lenders against loss due to borrower default, death, permanent disability, or, in limited instances, bankruptcy. Under the DL program, the federal government lends directly to students and their families, using federal capital (i.e., funds from the U.S. Treasury). The FFEL program is the successor program to the guaranteed student loan (GSL) program, originally enacted under Title IV, Part B, of the HEA. It is the older and larger of the two major federal student loan programs. Approximately four-fifths of non-Consolidation loans are made under the FFEL program, while approximately one-fifth are made under the DL program. During the past several months, a large number of FFEL program lenders have curtailed or ceased their participation in the FFEL program, citing reasons that include difficulties in raising capital through the securitization of student loan debt and reductions in lender subsidies enacted under the College Cost Reduction and Access Act of 2007 (CCRAA). Concerns have been raised that if lender participation in the FFEL program decreases substantially or if a substantial portion of lenders cease lending to students who attend certain institutions of higher education (IHEs), large numbers of students may face difficulty in obtaining FFEL program loans. In addition, concerns have been raised about access to borrowing opportunities for students who have come to rely on private (non-federal) student loans because they have exhausted their eligibility for federal student loans. Issues concerning federal student loans have been active during the 110th Congress. On October 27, 2007, the CCRAA was enacted, which made numerous changes to the federal student loan programs. Also in the 110th Congress, the House and the Senate have passed bills, H.R. 4137 and S. 1642, respectively, to amend and extend the HEA. On April 10, 2008, the House Committee on Education and Labor marked up H.R. 5715, the Ensuring Continued Access to Student Loans Act of 2008. This closely followed the introduction of S. 2815, the Strengthening Student Aid for All Act, in the Senate on April 3, 2008. This report examines proposals in H.R. 5715 and S. 2815 to amend the federal student loan programs. It will be updated to reflect legislative developments.

Related Legislation:
• H.R.4137
• S.1642
• H.R.5715
• S.2815

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