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Secretary Spellings Announces Task Force on Student Loans


U.S. Secretary of Education Margaret Spellings today announced the formation of a Task Force on Student Loans to build on the progress and work of the negotiated rulemaking committee on student loans and recommend regulations to the Secretary around key lender issues. The internal task force includes representatives from the Department’s Office of Post Secondary Education, Federal Student Aid and Office of the General Counsel. In addition, representatives in the Office of Inspector General will participate in an advisory role. The Task Force will focus on key issues such as preferred lender lists, prohibited inducements and the National Student Loan Data System (NSLDS).

“The negotiated rulemaking committee on student loans made great headway around these complex, significant and sensitive issues and I thank them for their service and hard work during the entire negotiated rulemaking process,” said Secretary Spellings. “The Department has been committed to these important issues since the start of the rulemaking process last year, and I intend for the Task Force to build off the progress of these efforts. As consensus around these issues was not reached during the negotiated rulemaking process, I am asking the task force to review and build on the negotiated rulemaking committee’s work and report back to me by May 31. I look forward to receiving this additional input and giving the public a chance to comment on the proposals this summer.”

In December 2006, the negotiated rulemaking process on issues including strengthening regulations around preferred lender lists and prohibited inducements commenced and the Department completed the fourth and final session related to loans on Friday, April 20.

As background, negotiated rulemaking is a process required by the Higher Education Act to provide an inclusive forum for interested parties to address federal policy and regulation. One of the purposes of negotiated rulemaking as mandated by Congress is to clarify the rules around what is permissible under current law. Over the past few months, the Department negotiated with student groups, institutions of higher education and the lending community to receive their input on developing rules and regulations around prohibited inducements and preferred lender lists.

Following the recommendations by the Task Force, the Secretary will consider the draft language and propose draft regulations. Secretary Spellings will then submit proposed regulatory language to go through a period of public comment before the final regulations will be posted in the Federal Register on or before November 1, 2007.

On March 30, 2007, the Department issued a Dear Colleague letter ( reminding Federal Family Education Loan (FFEL) Program participants of the statutory and regulatory provisions that student and parent borrowers may choose the lender they want to borrow a FFEL Program loan.

In addition to examining the issues of preferred lender lists and prohibited inducements, the Task Force will discuss the use of the National Student Loan Data System (NSLDS). Access to NSLDS is granted solely for the purpose of helping to determine the eligibility of an applicant for federal student aid and the collection of federal student loans and grant overpayments. This information may not be used for any other purpose, including the marketing of student loans or other products. The data contained in NSLDS is confidential and is protected by the Privacy Act of 1974 and other applicable statutes and regulations.

Secretary Spellings initiated a national dialogue on higher education when she created the Commission on the Future of Higher Education in 2005. The Commission’s findings were the basis for the Secretary’s action plan to improve America’s higher education system and provide students and families with more information and more affordable access to higher education. The Secretary announced her action plan in a speech to the National Press Club in September 2006. The Commission found that America’s financial aid system is “confusing, complex, inefficient, duplicative, and frequently does not direct aid to students who truly need it.”

Secretary Spellings looks forward to continuing to work with Congress to focus efforts not only on regulation and oversight of the financial aid system but to engage in a national effort to reform and restructure the entire system.


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