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The Availability of Federal Student Loans

WASHINGTON, March 11, 2008 /PRNewswire-USNewswire via COMTEX/ — The National
Association of Student Financial Aid Administrators (NASFAA) is confident that
federal student loans will be available to families and students this coming
academic year. Alarming reports about disruptions in the credit markets that are
affecting student loans have many families worried that student loans won’t be
available this fall. However, financial aid administrators, schools, federal
lawmakers, the U.S. Department of Education, and student loan providers are all
working together to ensure that no student is denied access to federal student
loans.

Despite some troubling reports, low-cost federal student loans are still
available. To date, NASFAA is not aware of any student being denied a federal
student loan due to market conditions. Even in instances where student loan
providers have suspended participation in the federal loan programs, other loan
providers have stepped in to fill in. Should conditions worsen to the point where
they could affect the availability of federal student loans, NASFAA has received
assurances that federal lawmakers, the U.S. Department of Education, and other
federal agencies will take appropriate actions to ensure an uninterrupted supply
of low-cost federal student loans to students and families.

News reports often blur the line between federal and private student loans, but
understanding the difference between the two is crucial. The vast majority of
student borrowers use federal student loans. Federal student loans - like
Perkins, Stafford, and PLUS loans - are backed by the federal government. Federal
student loans are not dependent on borrowers’ credit scores; the repayment terms
and conditions are specified by federal law, and are usually better than private
loans. Interest rates and fees on federal student loans will not increase.

A far smaller group of students rely on private student loans or other forms of
consumer financing like home equity loans. These students turn to private loans
if they cannot cover their cost of attendance with federal, state, and
institutional financial aid - including federal loans. Like other consumer loans
affected by the subprime mortgage meltdown, private student loans will be
costlier for some borrowers at some institutions this academic year. However,
students and parents should only use private education loans as a last resort.
Before borrowing private loans, students should exhaust all the federal, state
and institutional financial aid available to them.

To ensure a smooth financial transition into college this next academic year,
NASFAA advises students and families to apply for financial aid early by using
the Free Application for Federal Student Aid (FAFSA). Students should work
closely with their school’s financial aid office to complete the financial aid
process - including applying for federal student loans - as early as possible.
Students and parents with any questions or doubts about the availability of
student loans or other forms of financial aid should always contact their
financial aid office for specific information.

The National Association of Student Financial Aid Administrators (NASFAA) is a
nonprofit membership organization that represents more than 13,000 financial aid
professionals at nearly 3,000 colleges and universities and career schools across
the country. Based in Washington, D.C., NASFAA is the only national association
with a primary focus on student aid legislation, regulatory analysis, and
training for financial aid administrators. Each year, financial aid professionals
help more than 16 million students receive funding for postsecondary education.
In addition to its member Web site at http://www.NASFAA.org, the Association
offers a Web site with financial aid information for parents and students at
http://www.StudentAid.org.

SOURCE The National Association of Student Financial Aid Administrators
http://www.StudentAid.org

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