Released on = August 31, 2007, 8:58 am

Press Release Author = Brooke Heath

Industry = Education

Press Release Summary = Two new bills could result in budget cuts for FFEL program.

Press Release Body = Washington, DC, August 31, 2007-This week, a letter was sent by
four agencies representing the Federal Family Education Loan (FFEL) Program to
Congressional education leaders, asking that they reconsider the size of the budget
cuts that would result from the passage of two new bills: the College Cost
Reduction Act of 2007 and the Higher Education Access Act of 2007.

Written by the Consumer Bankers Association, Education Finance Council, National
Council of Higher Education Loan Programs, and Student Loan Servicing Alliance, the
letter was addressed to members of the Health, Education, Labor and Pensions
Committee and the House Committee on Education and Labor.

According to the FFEL organizations, the two new bills will cut more than $17
billion in subsidies to lenders and guarantors participating in the FFEL program,
which will be redirected to Pell Grants and other forms of aid.

"The bills make substantial cuts to the FFELP by reducing special allowance
payments, increasing lender-paid origination fees, and reducing loan insurance. A
preliminary assessment of these cuts suggests that the program will be changed
permanently," the letter explains. "Borrowers will likely lose many, and in some
cases all, of the borrower benefits currently offered by lenders."

Serving 80% of federal student loan borrowers and Title IV schools, the Federal
Family Education Loan (FFEL) Program is the nation's largest source for student
financial aid.

The letter continues, "We believe the budget cuts will make paying for college more
expensive for some students-especially middle-income students who might not qualify
for the expanded Pell Grant assistance. They would reduce the government's
projected support for the FFELP over the next five years by around 70%."

According to Higher Education Washington, Inc.'s NewsLine, the bills have already
received enough votes to pass through the House and Senate and are currently in the
conference stage.

Anticipating that the bills will be approved in the final stage, some lenders have
begun to inform their borrowers that their time to receive borrower benefits is
limited or are considering dropping out of the program altogether.

The letter states, "The timing of the cuts being contemplated could not possibly be
worse in terms of program stability."

"We hope that Congressional leaders will consider the value that FFEL programs offer
to loan borrowers," said EdFed loan counselor Jodie Corzano. "Currently, with the
borrower benefits that EdFed offers, we can reduce our borrowers' interest rates by
up to 1.25%! This can potentially save thousands of dollars over the life of the
loan for our borrowers."

About EdFed:

As a leader in the student loan industry, EdFed is dedicated to helping students and
graduates realize all of their educational goals and meet their student loan and
consolidation needs.

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Web Site = http://www.edfed.com

Contact Details = 175 S. Lake Ave. Suite 200
Pasadena, CA 91101
bheath@edfed.com
800-821-5659