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News Now

Washington
Obama 2010 budget could eliminate FFELP funding
WASHINGTON (5/11/09)—The Department of Education’s Federal Family Education Loans Program (FFELP) could be eliminated if portions of President Obama’s fiscal 2010 budget aimed at reducing entitlement spending are retained. The Obama Administration estimates that opting for private contractor assistance and eliminating the subsidies provided under FFELP could save over $4 billion, annually. The $4 billion surplus created by the policy changes would be used to provide need-based Pell Grants to low-income students. The Credit Union National Association (CUNA) “continues to meet with key members of Congress to explain the importance of the FFELP and the critical role credit unions play in the program," senior legislative representative Phil Drager said. CUNA has previously warned that the elimination of FFELP could jeopardize student lending at more than 1,000 credit unions throughout the country, and may end student lending by credit unions altogether. If adopted, the changes would take place beginning with the 2010-2011 academic year. Lenders that are currently providing loans via the FFELP program will continue to receive subsidies for their outstanding loans and for loans that were originated during the 2009-2010 academic year.


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