Reform Proposal
All stakeholders, including higher education institutions and the lending community, agree with the President’s main objectives: to create better student loan programs for students, schools, and taxpayers and to secure a historic level of savings for Pell Grants.
Student Loan Community Proposal
With a few enhancements to the Administration’s proposal, as outlined in the Student Loan Community Proposal, choice and competition in loan servicing and loan origination can be preserved by affording numerous originators and servicers, including smaller, regional, state and non-profit providers, the opportunity to compete to provide quality service to students.
More than 30 members of the student loan community 
— including, non-profit state agencies, stand-alone lenders and loan servicers, consumer banks and non-profit state-based guaranty agencies and secondary markets — have signed on to the Student Loan Community Proposal.
Key features
- Supports a historic increase in Pell Grant Funding
- Preserves choice and competition in the federal student loan program
- Eliminates lender subsidies and engages private sector to deliver high-quality services on a fee-for-service basis
- Leverages low-cost federal funding
- Keeps the loans on the government’s books so they earn the net interest income
- Reduces defaults by requiring “risk sharing” for all student loan servicing
- Extends repayment and graduated repayment for borrowers
- Eliminates massive transition risk of requiring 4,000 schools to immediately move to the government’s loan system
