Feb 08, 2005

Nelnet supports ASLP statement on President's budget proposal

Washington, D.C: February 8, 2005 - America's Student Loan Providers issued the following statement on the President's budget:

The President's FY 2006 budget contains good news for the American taxpayer. According to the budget, the Federal Family Education Loan Program (FFELP), which provides more than 75% of all student loans, has once again proven to be the lowest cost means of delivering federal students loans. Specifically, the President's budget showed that:

  • The FFELP cost taxpayers four tenths of one cent for each loan dollar: Overall, the total cost to taxpayers was less than $900 million to manage the $253 billion FFELP loan portfolio.

  • For the sixth year in a row, the cost of FFELP loan defaults fell well below that of the government forecast: In FY 2004, the actual cost of FFELP defaults was $1 billion less than the government forecast.

  • FFELP loan volume increased and loan defaults did not: The total amount of FFELP loan defaults remained at $2.9 billion in FY 2003 and FY 2004, even though the volume of FFELP loans increased 14 percent between these years.

  • Cumulative budget re-estimates have lowered the anticipated cost of the FFELP by $7 billion: The FFELP would have received a large downward re-estimate again this year if not for a $1.9 billion expected increase in the cost of FFEL consolidation loans.

The strong financial position of the FFELP is why the President's budget stated: "The Administration is strongly committed to the lender-based FFELP and expects it to continue as the primary source of loans to students in the years ahead." Since 1998, more than 500 schools have returned to the FFELP bringing the number of FFELP school customers to more than 4,500. In 2004, the companies and organizations that participate in the FFELP delivered 9.6 million loans worth $39.3 billion to 5.4 million students and parents. Congress should keep in mind the financial success of the FFELP and the value it brings to the student loan program when it considers reauthorization of the Higher Education Act.

America's Student Loan Providers represents more than 80 education and financial firms and organizations that provide federally guaranteed student loans through the Federal Family Education Loan Program (FFELP), a public-private partnership of schools, students, loan providers, loan guarantors, and the federal government. By leveraging private financial markets and competing for the right to lend to students, the FFELP brings value to students, schools, and taxpayers. More than 75 percent of the nation's colleges and universities participate in the FFELP because it allows them to choose the lender that best meets the financial needs of their students. More information is available at www.studentloanfacts.org.

Contact:

Harrison Wadsworth, CBA, 202-289-3903
Peter Warren, EFC, 202-955-5510
Shelly Repp, NCHELP, 202-822-2106

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