Rep. Courtney, Higher Ed Officials Urge Students and Families to Plan Now for College Aid

Press Release

Congressman Joe Courtney and higher education officials and advocates assembled today at the University of Connecticut to urge current and prospective students to begin planning now for their financial aid future as the mortgage lending crisis infects the student loan industry.

Congressman Courtney was joined by Michael Meotti, Commissioner, CT Department of Higher Education, Judith Greiman, President, CT Conference of Independent Colleges and Jean Main, Financial Aid Director, University of Connecticut.

"The lending industry has been battered by the subprime mortgage catastrophe and this crisis is now spreading into the student loan market," stated Courtney. "Students and their families should begin planning now for their financial aid needs and also create a backup plan."

Credit is tightening as a result of the subprime mortgage disaster. Some student loan lenders have encountered difficulties in accessing the capital market to finance their lending activity. Some lenders have announced that they are exiting the Federal Family Education Loan Program (FELP) or curtailing their lending by not originating Federal student consolidation loans.

Some FFELP lenders leaving the program are instead focusing their business in the private student loan market. In addition, some private student loan lenders have announced that they will be more selective in making loans to students and/or be more selective in their relationships with certain types of schools.

In 1998, the last time lenders threatened to leave the FFELP, Congress established student lending safety-net programs.

At a March hearing before the House Education and Labor Committee, Rep. Courtney was disappointed to hear testimony from the Secretary of Education, Margaret Spellings, that she has been only "monitoring the situation". Now is the time for the Secretary to make sure that all the tools at her disposal are ready to go, should the situation worsen.

"I will continue to advocate on behalf of students to make sure that the Federal government will continue to serve as a viable place to turn for financial assistance," added Courtney. "Financial aid must be accessible and affordable because it forms the foundation of higher education opportunities for many students and their families."

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