Institutions React to Spellings' Letter on Lender Issues
By Amit Agarwal
In response to the communications sent by Secretary of Education Margaret Spellings to schools, lenders, and guarantors regarding proposed student lending rules, several organizations weighed in with their comments.
Some of the highlights of their responses are as follows:
Most groups objected to Spellings' plan that would allow the Department of Education to collect and keep proceeds from defaulted Perkins Loans. In a stern response, the Coalition of Higher Education Assistance Organizations termed the department's plan a "seizure." The National Association of College and University Business Officers (NACUBO) said that allowing institutions to continue collecting on those loans would benefit needy students more than handing over the task to the Department of Education.
The department's proposal that preferred lender lists for every school should include at least three lenders met with protest. Some colleges commented that this rule would not work since a number of lenders are affiliated with one another. Others said that it would not be wrong for some colleges to recommend a single lender and that the plan could hurt small colleges.
Several school administrators criticized the department's proposal to ban lenders from donating funds or providing other services to colleges. Institutions contend that the move would unnecessarily prevent support for education from student loan providers, which may include philanthropic efforts.
Reacting to a proposal to alter rules governing how disabled students can discharge their student loans, colleges said the plan is an overreaction to bloated reports of abuse of financial aid. They said that, if applied, the plan would make the system more inaccessible to needy students.
A number of organizations protested the Notice of Proposed Rulemaking, saying that issuing proposed regulations before legislative action would create confusing or conflicting regulations. The Department of Education, which is likely to finalize the rules by fall, would make them effective by July 1, 2008. However, reauthorization of the Higher Education Act, which is set to be completed in the House by September, may make many of the department's rules laws and scrap many others.
Article Title : Institutions React to Spellings' Letter on Lender Issues
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Education is one of the most basic right of any human, but with the increase in prices and the costs involved in education this has made these rights turn into a privilege which very few can enjoy. Any normal person today in the whole of United States has to take an education loan at one point of time to pay for their education fees.