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Office of the Governor
Chicago, IL 60601
September 24, 2004
Honorable Rod Paige
United States Department of Education
Washington, DC 20202
Dear Secretary Paige:
I am writing in response to the recent
Government Accountability Office report regarding the Federal Family
Education Loan Program. The GAO report found that billions of
education dollars are going into the pockets of student loan
companies, as opposed to students and families. In your role as an
advocate for student access and affordability, I ask that you move
quickly to close the loophole that allows student loan companies to
get a disproportionate amount of the Family Education Loan Program
funds. This decision has a real impact on students in Illinois and
the rest of the country.
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Over 650,000 students in Illinois
rely on financial aid, two-thirds of whom receive federal
financial aid assistance. In 2003, Illinois students received $666
million in federal loans.
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In this fiscal year alone, the U.S.
Department of Education has already paid a total of $634 million
from the Federal Family Education Loan Program to the loan
companies. If this $634 million had instead gone directly to
students across the country, federal loans could have been
extended to an estimated 5,700 additional Illinois students.
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this article] |
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If the $1.4 billion that has gone to
the student loan companies over the past three years had instead
been targeted directly to students, Illinois could have nearly
doubled the current amount of federal loans Illinois students
receive.
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With double-digit poverty rates for
Illinois families, this is not the time to be siphoning off
critical education dollars. Illinois has one of the largest
need-based financial aid programs in the nation, the Monetary
Award Program for participating families with an average income of
$29,000. We know through this program that even with both state
and federal assistance programs, too many Illinois students are
still not able to cover the entire cost of tuition and fees. The
bottom line is that without strong financial aid programs, many
Illinois students simply cannot afford a college education.
The existing loophole in the Family
Education Loan Program allows loan companies to take advantage of a
fixed interest rate that is exorbitantly high. With unprecedented
low interest rates, a guaranteed rate of 9.5 percent for these
companies is clearly out of sync with current market rates. As a
result, students are receiving less and the companies are receiving
more.
I hope that we can work together to
ensure that federal education dollars are maximized for those who
need it the most.
Sincerely,
Governor Rod R. Blagojevich
[News release from the
governor's office] |
