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<TITLE>New Legislation Mandates Federal Stafford and PLUS Default Fee</TITLE>
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<P><FONT FACE="Times New Roman">As a result of the Deficit Reduction Act of 2005, signed into law on February 8, 2006, the Oklahoma Guaranteed Student Loan Program (OGSLP) will be required to collect and deposit a 1.0 percent Federal Default Fee into our Federal Reserve Fund. To comply, OGSLP will charge the fee for all Federal Stafford and PLUS Loans guaranteed on or after July 1, 2006.<STRIKE></STRIKE></FONT></P>
<P><FONT FACE="Times New Roman">The primary purpose of the Federal Reserve Fund is to reimburse lenders for default claims, but also to support other important activities, such as default prevention. The new law prohibits the use of Federal funds to offset the new 1.0 percent Default Fee. </FONT></P>
<P><FONT FACE="Times New Roman">Although the new law does permit non-federal resources to be used to pay this fee, it is important that OGSLP continue to direct the use of non-federal resources for loan products and services, default prevention activities, and early assistance and outreach efforts, including financial literacy programs. Federal budget officials and many in the guarantor community have concluded that this Default Fee will strengthen the Federal Reserve Fund and maintain the stability of the Federal Family Education Loan Program.</FONT></P>
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<BR><FONT FACE="Times New Roman">Overall, the new legislation will ultimately reduce borrower fees. The current origination fee charged by the Department of Education will decline from 3 percent to 2 percent beginning July 1, 2006. Further annual scheduled declines will result in the elimination of the origination fee by 2010. </FONT></P>
<P><FONT FACE="Times New Roman">OGSLP appreciates the continuing support from our financial aid community as we continue to assist Oklahoma families in pursuit of higher education. If you have questions regarding this implementation, please contact Rick Edington at </FONT><A HREF="mailto:redington@ogslp.org"><U><FONT COLOR="#0000FF" FACE="Times New Roman">redington@ogslp.org</FONT></U></A><FONT FACE="Times New Roman"> or (405) 234-4333 or Mary Mowdy at </FONT><A HREF="mailto:mmowdy@ogslp.org"><U><FONT COLOR="#0000FF" FACE="Times New Roman">mmowdy@ogslp.org</FONT></U></A><FONT FACE="Times New Roman"> or (405) 234-4310. </FONT></P>
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<P><FONT SIZE=2 FACE="Arial">Policy Implementation, Training & Communications</FONT><BR>
<FONT SIZE=2 FACE="Arial">OGSLP</FONT><BR>
<FONT SIZE=2 FACE="Arial">405.234.4440 or 800.247.0420</FONT><BR>
<FONT SIZE=2 FACE="Arial">policytrainingcommunications@ogslp.org</FONT><FONT FACE="Times New Roman"> </FONT>
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