Thirty-Two Representatives Want Federal Reserve to Take Action

WASHINGTON - Congressman Paul E. Kanjorski (D-PA), the Chairman of the House Financial Services Capital Markets, Insurance, and Government Sponsored Enterprises Subcommittee, and 31 other Members of Congress today released a letter in which they urged Federal Reserve Chairman Ben S. Bernanke to take action to help restore stability in the student loan marketplace and ensure continued access to student loans.

"The increasing volatility in the financial markets could disrupt access for the estimated 6.7 million students and families expected to apply for Federal Family Education Loan Program loans in the coming months.  I strongly urge Chairman Bernanke to act," said Chairman Kanjorski.  "We need to ensure that students can continue to obtain the loans they need to access to higher education opportunities."

Ongoing problems in the student loan market have now resulted in more than two dozen originators ending participation in Federal Family Education Loan Program (FFELP) or suspending lending under it.  For example, the Pennsylvania Higher Education Assistance Agency (PHEAA), which aids 500,000 Pennsylvania students, recently shelved its FFELP lending.  Action by the Federal Reserve could help to address this situation.

Chairman Kanjorski added, "In our letter, we asked the Federal Reserve to use its emergency authority to provide access to the Federal Reserve for student loan originators issuing highly rated securities backed by student loans.  We also asked the Federal Reserve to allow originators to use student loan asset-backed securities as collateral at the securities lending facility announced last week."

Several key legislators tasked with oversight responsibilities for student lending also signed the letter to Chairman Bernanke, including Congressman Howard "Buck" McKeon (R-CA) and Congressman Rubén Hinojosa (D-TX).  Congressman McKeon ranks as the most senior Republican on the House Education and Labor Committee.  Congressman Hinojosa serves as the Chairman of the Education and Labor Subcommittee on Higher Education, Lifelong Learning and Competitiveness.

On February 15, Chairman Kanjorski previously led twenty other Members of Congress in sending a letter to Secretary of the Treasury Henry M. Paulson, Jr. and Secretary of Education Margaret Spellings urging them to take action to protect the student loan market.  They are still awaiting a response to their inquiry.

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Click here for a copy of Congressman Kanjorski and the thirty-one Members' letter to Chairman Bernanke.