Capital Markets Chairman Also Urges Vigilance and Further Appropriate Actions to Protect Borrowers and Provide Lender Liquidity

WASHIGNTON - Today, Congressman Paul E. Kanjorski (D-PA), the Chairman of the House Financial Services Capital Markets, Insurance, and Government Sponsored Enterprises Subcommittee, released the below statement following news in which the Administration stated how they will implement H.R. 5715, the Ensuring Continued Access to Student Loans Act of 2008.

"The good news is that Secretary Spellings has announced her initial plans for implementing the Ensuring Continued Access to Student Loans Act before Memorial Day and the start of the peak origination season, as I had previously urged.  The loan purchase and short-term liquidity programs made known today will hopefully help students and their families to get the loans they need to pursue their higher education goals this fall.

"The commitment by Secretary Spellings to continue working in the coming weeks with lenders to explore other options for reengaging our capital markets also pleases me.  In particular, I hope that the Department will eventually use the full authority that the Congress recently provided to adopt other capital providing mechanisms for originators who made loans in earlier academic years, not just those who will make loans in the upcoming academic year.  Such a program might encourage the 89 lenders who have recently exited or suspended participation in the Federal Family Education Loan Program to make originations once again, including the Pennsylvania Higher Education Assistance Agency.

"If today's announcement fails to keep existing student loan originators in the Federal Family Education Loan Program, the Administration will need to take immediate action in order to maintain an effective student loan distribution system.  Going forward, the Education Department should also explore opportunities for allowing those lenders who use the new loan purchase program to continue to administer and service those loans in order to avoid borrower confusion and frustration with having to work with two different servicers merely because of the ongoing capital availability problems.

"In sum, we must remain vigilant in the coming weeks and take further administrative and legislative action, as needed, to address the problems in the student lending marketplace."

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