	Introduction

The Higher Education Act of 1965 (HEA) is being considered for reauthorization. Title IV of theact authorizes the major federal student aid programs, including the federal student loan programs,which provide more direct aid to support students' postsecondary educational pursuits than any othersource. This report discusses issues concerning the student loan programs thatare likely to be considered during reauthorization. (1) 

		Introduction to the Federal Student Loan Programs

The federal government operates two major student loan programs: the Federal FamilyEducation Loan (FFEL) program, authorized by Part B of Title IV of the HEA, and the WilliamD. Ford Direct Loan (DL) program, authorized by Part D of Title IV of the HEA. (2) These programs provide loansto undergraduate and graduate students and the parents of undergraduate students to help them meetthe costs of postsecondary education. In FY2003, these programsprovided $45.8 billion in new loans to students and their parents. The FFEL and DL programs provide the following types of loans to students and theirparents:
Stafford loans (subsidized and unsubsidized): Lowinterest, variable rate loans available to undergraduate and graduate students. It is generally thecase that enhancements to borrower benefits increase federal subsidy costs. It is likely that a reduction in borrower origination fees (particularly for student borrowers)will be considered in reauthorization. Helping students by reducing charges is a goal upon whichmany can agree, but finding offsetting revenues from other sources is often a challenge. Loan Limits. Interest is often expressed in promoting greater comparability amongFFEL and DL consolidation benefits. These proceedscan be used to finance new 9.5% loans. Thesesavings could be used to offset new expenditures.
The federal government operates two major student loan programs: the Federal FamilyEducation Loan (FFEL) program, authorized by Part B of Title IV of the Higher Education Act(HEA), and the William D. Ford Direct Loan (DL) program, authorized by Part D of Title IV of theHEA. These programs provide loans to undergraduate and graduate students and the parents ofundergraduate students to help them meet the costs of postsecondary education. Together, theseprograms provide more direct aid to support students' postsecondary educational pursuits than anyother source. In FY2003, they provided $45.8 billion in new loans to students and their parents.
The HEA is being considered for reauthorization. This report discusses issues concerningthe FFEL and DL student loan programs that are likely to be considered during reauthorization.
Issues that are expected to receive attention include borrower interest rates, loan fees,refinance opportunities, and annual and aggregate loan limits. Additionally, it is likely thatconsiderable attention will be devoted to promoting greater comparability between the loan termsand conditions made available to borrowers in the FFEL and DL programs.
In general, helping students by enhancing their benefits is a goal upon which many can agree,but finding offsetting revenues is often a challenge. It is therefore likely that some effort will bemade to identify savings in the loan programs' mandatory spending that could be used to offset costsassociated with enhancements in borrower benefits, or that could be used to finance other studentaid expenditures. This report will be updated as events warrant.