Concerning Federal Funding for College Loans

As a summer intern in the Capitol Hill office of Senator Sam Brownback (R-KS), I had the opportunity to learn a great deal about many issues in American politics, such as conservative and liberal ideologies, climate change policy, abortion legislation, and education reform, just to name a few. I also had the opportunity to bear witness to the many debates and opinions that shape American politics. Even though I did not agree with all of the voices that weighed in on the television networks and over the airwaves, their passion for the matter at hand inspired me to re-examine how my political beliefs translated into action in the real world, especially as it pertains to my education.

During my internship, I had the privilege of sitting in on a meeting between Senator Brownback and one of his policy advisors to discuss recent developments in federal funding for education. They discussed the Federal Family Education Loan Program (FFELP) or, to be more specific, recent changes to funding for this program.

The FFEL program was established in 1965 thanks to the Higher Education Act. By partnering with universities, colleges, and private loan companies, FFEL provides four types of federally guaranteed loans for students, all of which are used throughout American colleges: Stafford Loans, Unsubsidized Stafford Loans, Federal PLUS Loans, and Federal Consolidation Loans. Though these programs differ by interest rates and payment periods, these four programs account for 75% of privately financed federal student loans in the United States. In contrast, the Direct Loan (DL) program gives students low-interest loans directly from the federal government; every single dollar disbursed by this program comes directly from the United States Treasury. The standard loan package offered by the DL program requires students to pay a fixed amount each month, with a ten-year deadline to repay their loans.

Currently, both programs receive government funding. However, President Barack Obama's budget proposal for fiscal year 2010 eliminated funding for the FFEL program in favor of the DL program. The Senate passed President Obama's budget proposal on April 29. The president's administration justified this decision by claiming that it would yield gross savings of $87 billion for the federal government between the years 2010 and 2019.


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