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The Future of FFELP Deserves a Full Debate

by Education Finance Council President Peter Warren - 04/22/09 4:41 PM ET

Congress returns this week to among other things, begin conference negotiations on the Fiscal Year 2010 Budget. One of the toughest issues to work out during those negotiations will be whether or not to include reconciliation instructions. While the Senate’s budget resolution contained no such instructions, the House-passed version included them for health care reform and student loans. Both entail major policy changes but while much has been made about using reconciliation for health care reform, the same concern has not been raised when it comes to student loans. Specifically, President Obama has proposed the elimination of the Federal Family Education Loan Program (FFELP) in favor of the government-run Direct Loan program.

For over 40-years, the Federal Family Education Loan Program has fostered college access and opportunity in higher education. Through the FFELP, its participants, including nonprofit and state based agencies, are able to offer students, parents and schools choice and competition as well as essential value-added benefits such as college outreach, debt management and financial literacy. Thanks to their efforts, millions of students have been able to realize their goal of a higher education.

Should reconciliation instructions be included in the final budget resolution, this successful long-standing public-private partnership will be abruptly eliminated without even a chance to debate its full benefits and the cost of transitioning to one-hundred percent Direct Loans. Considering the elimination of FFELP will leave them with no choice in federal student loan programs, don’t students, families and schools deserve at least that debate?