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Commentary: An Appeal to Student Loan Lenders

Assemblyman Pedro Nava calls on lenders to stay in the market and not abandon students.

On June 9, as chairman of the Assembly Banking and Finance Committee, I convened a hearing to examine the student loan crisis and its effect on California students’ access to a college education.

Assemblyman Pedro Nava

The Assembly learned that lenders are leaving the student loan market without considering the effects to California students. Some lending decisions appear to be based on a tiered system that abandons California’s community colleges and independent colleges.

After the hearing, Sallie Mae, the nation’s leading student loan company, reiterated its commitment to fund every eligible federal student loan application received from every student at every school for the upcoming academic year. I am very pleased that Sallie Mae has decided to lead by example on this issue, and I think this will send a clear message to other lenders that they should remain in the California student loan market.

I have sent a letter asking those lenders who have decided to walk away from our students to reconsider their actions and a letter to those who have continued to lend to remain engaged. They should be partners in our efforts to ensure the children of California attain their dream of a higher education.

The following is the letter sent to the lenders:

“Dear Lender:

As of early June 2008, I have been advised that 112 of the Federal Family Education Loan Program (FFELP) lenders have stopped making any federal student loans. I recently convened a joint informational hearing of the California State Assembly Banking and Finance Committee with the California State Assembly Higher Education Committee regarding the impact of the credit crunch on student loans. We heard from a number of experts and students who relayed their concerns and potential solutions. The testimony confirmed that it is in the best interest of California to ensure we have financial access to all students with dreams of receiving a higher education. 

I ask, as chairman of the Assembly Banking and Finance Committee, that you continue to participate in FFELP. Given the number of California students that might be affected, there will be a huge impact on the state if more lenders withdraw or if those 112 lenders currently withdrawn continue to not participate. FFELP remains the largest source of student aid and with over 50 percent of college students looking to borrow money it is important that all eligible students have full access to all financial aid options. 

Without your help, more than 100,000 families could be unable to borrow money for their children’s education. 

A number of students and potential students will be forced to accept more expensive private loans, to take a semester off, or worse yet, will be forced to choose another direction not related to education.  Now is the time to help those most in need as we approach a new school year. 

I humbly ask you to consider this request to ensure the children of California have a chance to attain a higher education.”

Assemblyman Pedro Nava, D-Santa Barbara, represents the 35th District.

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