Report from the Lender Liaison Committee
Jane McNaughton, Chair

Jane McNaughton, chair, presented the following list of proposed committee members for Board approval at the SASFAA Board Meeting in Atlanta, Georgia, on August 8, 2004.

The SASFAA Board approved the proposed committee members.

Jane reported that the Committee will work with Brent Tener, SASFAA 2005 Conference Chair, to identify sessions and provide presenters for the February conference.

Jane presented the following report as lender liaison:

Reauthorization and legislation provisions affecting FFELP and Direct Loans
HR 4283 The College access and Opportunity Act of 2004 - introduced May 5, 2004. John Boehner (R-OH) is the Chairman of the Education and Workforce Committee and Howard P. “Buck” McKeon (R-CA) is the Chairman of the 21st Century Competitiveness Subcommittee.

According to Dallas Martin at the recent NASFAA conference in Minneapolis, Reauthorization of the Higher Education Act will not be completed during this Congress. Congress will adopt an extender to keep the programs operational after the September 30, 2004 expiration date and committee hearings are likely to continue.

Provisions of HR 4283 that affect FFEL and Direct Loans:

• Increases annual subsidized loan limits for 1st year students from $2625 to $3500 and for 2nd year students from $3500 to $4500
• No increases in aggregate limits
• Increases annual unsubsidized loan for graduate/professional borrowers from $10,000 to $12,000
• Repeals current law move to 6.8% fixed interest rates on Stafford loans on July 1, 2006
• Retains variable interest rate capped at 8.25%
• Repeals single holder rule
• Establishes variable interest rate capped at 8.25% for FFEL and Direct consolidation loans after July 1, 2006.

Provisions affecting FFEL Loans:

• Reduces FFEL origination fees:
  • From 3% to 2% after July 1, 2006 and before July 1, 2008
  • From 2% to 1.5% after July 1, 2008 and before July 1, 2010
  • From 1.5% to 1.0% after July 1, 2010

Provisions affecting Direct Loans:

• Reduces Direct Loan origination fees:
  • From 4% to 2% after July 1, 2006 and before July 1, 2008
  • From 2% to 1.5% after July 1, 2008 and before July 1, 2010
  • From 1.5% to 1% after July 1, 2010
• Restores expired loan disbursement provisions

A bill co-sponsored by Thomas Petri (R-WI) and George Miller (D-CA) and introduced on May 17, 2004, The Direct Loan Reward Act of 2004 (HR 4370) , has picked up 24 co-sponsors, 5 Republicans and 19 Democrats. The bill calls for all student loans to be issued directly by the federal government. The National Direct Student Loan Coalition (NDSLC) is aggressively pushing this legislation.