Ms. Shelley A. Saunders, Vice President of Borrower Services American Student Assistance On Behalf of the National Association of Student Loan Administrators
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Testimony of the National Association of Student Loan Administrators
Presented by Shelley A. Saunders
On behalf of NASLA, the National Association of Student Loan Administrators, I would like to voice our support for the retention of the right of the Secretary of the Department of Education to enter into voluntary, flexible agreements with guaranty agencies.
To date, four Voluntary Flexible Agreements have been entered into between the Secretary and the following guarantors: American Student Assistance, EdFund, Great Lakes Higher Education Guaranty Corporation and Texas Guaranteed Student Loan Corporation. We agree with Secretary Paige when he cited the Voluntary Flexible Agreements as important department initiatives to avert default by borrowers. The Voluntary Flexible Agreements permit the Secretary to work with guarantors to create innovative financing models that make the guarantors accountable for default reduction and improve customer service to borrowers. Even though the existing Voluntary Flexible Agreements have been in place for less than two years, they are already showing great promise of reducing the cost of the FFEL program to the Treasury by reducing borrower default.
The VFA language under section 428A provides the Secretary with the ability to create laboratories for on-going innovation in the student loan industry. This important authority of the Secretary of Education should be maintained because the resulting innovations save money but, most importantly, save borrowers. Continuation of the Voluntary Flexible Agreements has also been endorsed by the National Association of Financial Aid Administrators, the American Council on Education and the National Council of Higher Education Loan Programs.