As part of the FFELP, Congress promised lenders a certain rate of return in exchange for providing funding, loan servicing, collection and program participation. One program feature lets borrowers consolidate all of their variable interest rate loans into a single, fixed rate loan. It’s a very good way for borrowers to save money interest, and it reduces the overall cost of the loan to the borrower.

Congress is very angry about that. They really didn’t want borrowers to consolidate their loans and save thousands of dollars over the life of the agreement. Why would Congress not want students to save money on their student loans? Isn’t reducing the cost of a college education what the Congressional Democrats say they want? And isn’t that just what they promise to do with the CRSA?

Congress is angry because these loan consolidations, which collectively could save borrowers billions of dollars in interest, could also cost the Federal government the same amount. Remember, as part of the FFELP, the Feds agreed to provide program lenders a certain rate of return on student loans. If interest rates rise substantially, the Federal government could be on the hook for a lot of money.

Now, after borrowers consolidated 2.2 million loans at rates as low as 3.5 percent, Congress isn’t too happy about this deal. The lenders did what Congress asked them to do under the terms of the agreement - putting out billions of dollars in student loans - but now Congress wants to change the rules. And it’s going to start by punishing the student loan lenders who have participated in this program for more than 40 years. Keep in mind that the FFELP lenders didn’t author the deal. Congress did.

Dear students, your Congressmen and Senators don’t want to invest in your future. They don’t want your tax dollars to work for you. (They just want your tax dollars.) They want you in their program, where you operate by their rules, and don’t get to choose a lender who will consolidate loans at a low interest rate for your benefit. When you look out for yourself, you’re hurting the Federal government, and Uncle Sam just isn’t going to put up with that anymore.

FFELP lenders operate within the program rules established by Congress and the Department of Education. Everyone knew about, understood and agreed to the loan consolidation feature. But Congress wants to change the deal… your deal. It’s curious that the proposed CRSA reduces the interest rate on student loans to 3.4 percent by 2012. If Congress put itself at risk the first time interest rates fell to 3.5 percent, won’t the same thing happen to the Feds under the new deal? (Yes.)

Tell your representatives in Congress to stick with the plan they wrote and agreed to. Hold them responsible for protecting your right to finance your college education in the way that best benefits you.

You can make a difference
Call your Senators
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Download a letter and fax it to your Senators
Sign the petition and
Tell your friends the truth about the proposed student loan legislation