The Availability of Federal Student Loans

WASHINGTON, March 11 /PRNewswire-USNewswire/ -- The National Association
of Student Financial Aid Administrators (NASFAA) is confident that federal
student loans will be available to families and students this coming academic
year. Alarming reports about disruptions in the credit markets that are
affecting student loans have many families worried that student loans won't be
available this fall. However, financial aid administrators, schools, federal
lawmakers, the U.S. Department of Education, and student loan providers are
all working together to ensure that no student is denied access to federal
student loans.
Despite some troubling reports, low-cost federal student loans are still
available. To date, NASFAA is not aware of any student being denied a federal
student loan due to market conditions. Even in instances where student loan
providers have suspended participation in the federal loan programs, other
loan providers have stepped in to fill in. Should conditions worsen to the
point where they could affect the availability of federal student loans,
NASFAA has received assurances that federal lawmakers, the U.S. Department of
Education, and other federal agencies will take appropriate actions to ensure
an uninterrupted supply of low-cost federal student loans to students and
families.
News reports often blur the line between federal and private student
loans, but understanding the difference between the two is crucial. The vast
majority of student borrowers use federal student loans. Federal student loans
- like Perkins, Stafford, and PLUS loans - are backed by the federal
government. Federal student loans are not dependent on borrowers' credit
scores; the repayment terms and conditions are specified by federal law, and
are usually better than private loans. Interest rates and fees on federal
student loans will not increase.
A far smaller group of students rely on private student loans or other
forms of consumer financing like home equity loans. These students turn to
private loans if they cannot cover their cost of attendance with federal,
state, and institutional financial aid - including federal loans. Like other
consumer loans affected by the subprime mortgage meltdown, private student
loans will be costlier for some borrowers at some institutions this academic
year. However, students and parents should only use private education loans as
a last resort. Before borrowing private loans, students should exhaust all the
federal, state and institutional financial aid available to them.
To ensure a smooth financial transition into college this next academic
year, NASFAA advises students and families to apply for financial aid early by
using the Free Application for Federal Student Aid (FAFSA). Students should
work closely with their school's financial aid office to complete the
financial aid process - including applying for federal student loans - as
early as possible. Students and parents with any questions or doubts about the
availability of student loans or other forms of financial aid should always
contact their financial aid office for specific information.
The National Association of Student Financial Aid Administrators (NASFAA)
is a nonprofit membership organization that represents more than 13,000
financial aid professionals at nearly 3,000 colleges and universities and
career schools across the country. Based in Washington, D.C., NASFAA is the
only national association with a primary focus on student aid legislation,
regulatory analysis, and training for financial aid administrators. Each year,
financial aid professionals help more than 16 million students receive funding
for postsecondary education. In addition to its member Web site at
www.NASFAA.org, the Association offers a Web site with financial aid
information for parents and students at www.StudentAid.org.
SOURCE The National Association of Student Financial Aid Administrators

Mindy Kaplan Eline, +1-202-785-6950, elinemk@nasfaa.org