White House Reaffirms Student Loan Committment

In response to increasing concerns over financial-aid availability as the economic downturn continues, the Bush administration released a joint statement from U.S. Secretary of Education Margaret Spellings and Secretary of the Treasury Henry Paulson last week reassuring students that the administration will take decisive steps to maintain the stability of the student-loan market.

Though officials revealed no specific plans in achieving this stability, the final goal is to restore “the government-guaranteed student loan market to normal operations,” the statement from Spellings and Paulson said.

Additionally, a bill signed last week by President George W. Bush extended the Ensuring Continued Access to Student Loans Act, renewing the Education Department’s temporary powers to apply federal funds to loans for students and their families.

“We have no idea what steps the administration is planning to take, though we are seeking meetings with administration officials to see what they intend to do,” National Association of Student Financial Aid Administrator Larry Zaglaniczny said.

Zaglaniczny said it is crucial that the government also works toward securing loans for students continuing their studies through this academic year.

“While it’s great that the administration is looking to ensure that loans will be available for the next academic school year, we will be working to make sure they are also taking steps to make sure that loans will still be there for the students who need them for next semester of this year,” Zaglaniczny said.

Though the student loan market is facing difficulties because of tight credit markets and an uncertain economic forecast, Zaglaniczny is confident that federal loans for students will still be available next year.

“While I have no question that any administration will ensure that federal loans are available, an administration can take measures that affect the student loan market that are more or less effective,” he said. “We, of course, are hoping for the former.”

Under the Bush administration’s $700-billion bailout plan, Paulson has standing powers to prop up both the federal loan market and the more restrictive private student loan market with federal funds.

“The secretary of the treasury has a blank check, in terms of his authority, to intervene in the student loan markets — both federal and nonfederal,” Zaglaniczny said.

While no further explanation has clarified the ways through which the administration hopes to secure the student loan market, the statement describes the initiative as expedited and aggressive, and says that more announcements will be forthcoming over the next several weeks.