Key Policy Letters Signed by the Education Secretary or Deputy Secretary
Archived Information

September 30, 2004

The Honorable John Boehner
Committee on Education and the Workforce
The U.S. House of Representatives
Washington, D.C. 20515

Dear Chairman Boehner:

Thank you for your efforts to end excessive special allowance payments to certain lenders under the Federal Family Education Loan Program. Recently, these unnecessary payments, which are made pursuant to a regulatory interpretation by the prior administration, have increased significantly.

The prior administration's interpretation expressly permitted lenders to extend these payments indefinitely. That interpretation runs counter to the clear intent of Congress and the policy of the present Administration. The President proposed to correct this issue in his fiscal year 2005 Budget and direct the savings to benefit students and teachers.

The most direct and expeditious path to close this loophole is through legislation. Because the current Higher Education Act (HEA) provisions that govern rulemaking prevent the Secretary of Education from immediately stopping these payments, the Administration urges the Congress to enact legislation closing this loophole without delay.

We stand ready to work with the Congress to achieve this goal. Thank you again for your leadership on this important issue.



Rod Paige
Secretary of Education
Joshua B. Bolten
Director, Office of Management and Budget


Identical letter sent to The Honorable Judd Gregg

Print this page Printable view Bookmark  and Share
Last Modified: 09/30/2004