[Congressional Record Volume 140, Number 36 (Friday, March 25, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: March 25, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
     HIGH DEFAULT RATE FOR CERTAIN INSTITUTIONS OF HIGHER EDUCATION

  Mr. FORD. Mr. President, I now ask unanimous consent the Senate 
proceed to consideration of S. 2004, a bill introduced earlier today by 
Senators Bumpers and Cochran, and others, dealing with the high default 
rate for certain institutions of higher education; that the bill be 
read a third time and passed; the motion to reconsider laid on the 
table; and any statements thereon appear in the Record at the 
appropriate place as though read.
  The PRESIDENT pro tempore. Without objection, it is so ordered.
  So the bill (S. 2004) was deemed read the third time and passed, as 
follows:

                                S. 2004

       Be it enacted by the Senate and House of Representatives of 
     the United States of American in Congress assembled,

     SECTION 1. EXTENSION.

       The matter preceding clause (i) of section 435(a)(2)(C) of 
     the Higher Education Act of 1965 (20 U.S.C. 1085(a)(2)(C)) is 
     amended by striking ``July 1, 1994'' and inserting ``July 1, 
     1998''.

  Mr. BUMPERS. Mr. President this bill would extend the current 
exemption from loan default thresholds for historically black colleges 
and universities and tribally controlled Indian community colleges. The 
exemption, which is due to expire on July 1, 1994, would be extended to 
July 1, 1998.
  The extension authorized in this bill would allow time for 
historically black colleges and universities to implement a community-
wide strategy that has the full support of Secretary of Education 
Reiley and the White House. The strategy is designed to reduce default 
rates at historically black colleges and universities through 
administrative reforms and a new peer counseling system.
  The Congress has long recognized the special and historical mission 
these institutions carry out, and, consequently, has specifically 
exempted historically black colleges from default rate thresholds. The 
General Accounting Office has estimated that, without an extension of 
the current exemption, 33 of the 104 historically black colleges and 
universities would become ineligible to participate in the Federal 
Student Loan Program on July 1, 1994, thereby jeopardizing access to 
higher education for many minority students.
  It is important to point out that the historically black colleges and 
universities receive a relatively low volume of Federal Student Loan 
dollars. In 1991 the Federal Student Loan Program totaled $13.5 
billion. Loans to students at historically black colleges and 
universities were only $372 million, or less than 2.8 percent of the 
entire program.
  This bill is supported by the Administration and by the American 
Council on Education and 14 other organizations representing 
institutions of higher education.
  Mr. President, I ask unanimous consent that a letter of support from 
the American Council on Education be printed in the Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                                American Council on Education,

                                 Washington, DC, February 1, 1994.
     Hon. Claiborne Pell,
     U.S. Senate, Washington, DC.
       Dear Senator Pell: The higher education associations listed 
     below represent all 3200 of the nation's 2- and 4-year, 
     public and private colleges and universities. We are seeking 
     your support for a matter of considerable urgency and 
     profound importance: extending the exemption for the 
     Historically Black Colleges and Universities (HBCUs) and the 
     tribally-controlled and Navajo community colleges from the 
     student loan default rate cut-off in the Federal Family 
     Education Loan Program (FFELP). Without legislative 
     intervention, the current exemption will expire on July 1, 
     1994, and make 33 institutions--one-third of the total number 
     of HBCUs--ineligible to participate in federal student loan 
     programs.
       Historically Black Colleges and Universities, tribally-
     controlled and Navajo community colleges play a unique role 
     in making a college education available to minorities. 
     Millions of graduates of these schools have distinguished 
     themselves as superbly productive and influential members of 
     society. The prospect that many of these schools could lose 
     their eligibility to participate in the FFELP program would 
     constitute a devastating setback to efforts to increase 
     minority participation in higher education, and threatens the 
     continued viability of the institutions themselves.
       We do not condone high default rates, and we strongly 
     support congressional and executive branch default reduction 
     measures. However, we believe that the default rates at these 
     schools have been influenced heavily by such factors as a 
     sluggish economy and a decade of declining federal grant 
     assistance. As grant assistance has given way to borrowing, 
     loan volume among the HBCUs, tribally-controlled and Navajo 
     community colleges has increased significantly. Even as this 
     trend has occurred, however, less than 3 percent of the 
     annual $19 billion in FFELP loans are made to HBCU students, 
     and schools have stepped up their efforts to inform students 
     about their responsibilities for loan repayment and to work 
     with lenders and guarantee agencies to ensure that loans are 
     promptly repaid.
       As President Clinton said in his State of the Union 
     message, ``* * * if we give ordinary people equal 
     opportunity, quality education, and a fair shot at the 
     American dream, they will do extraordinary things.'' No 
     statement could better capture the essence of what these 
     colleges and universities do. We urge you to enable the 
     Historically Black Colleges and Universities and the 
     tribally-controlled and Navajo community colleges to carry 
     forward their distinctive efforts to serve low-income and 
     minority students by swiftly extending their FFELP 
     legislative provision.
           Sincerely,
                                                 Robert H. Atwell,
                                                        President.
       On behalf of: American Council on Education, American 
     Association of Community Colleges, American Association of 
     State Colleges and Universities, Association of American 
     Universities, Association of Catholic Colleges and 
     Universities, Association of Community College Trustees, 
     Association of Governing Boards of Universities and Colleges, 
     Association of Jesuit Colleges and Universities, Council of 
     Independent Colleges, Hispanic Association of Colleges and 
     Universities, National Association for Equal Opportunity in 
     Higher Education, National Association for Independent 
     Colleges and Universities, National Association of Student 
     Financial Aid Administrators, National Association of State 
     Universities and Land-Grant Colleges, United Negro College 
     Fund.

  Mr. COCHRAN. Mr. President, the higher education amendments of 1992 
established a mechanism for removing institutions of higher education 
from the student loan program if the number of defaulted loans at any 
institution averaged 25 percent or more over a 3-year period. Such 
schools are no longer eligible to participate in the Federal student 
loan program. An exemption was provided for Historically Black Colleges 
and Universities [HBCU's], tribally controlled community colleges and 
Navajo community colleges, until July 1, 1994.
  These institutions offer postsecondary education to a 
disproportionate number of students from disadvantaged backgrounds. 
Ninety-five percent of students attending Mississippi's nine HBCU's 
receive some form of Federal student aid. Without Federal assistance, 
these institutions would be closed and their students would more than 
likely not attend college at all.
  The exemption for HBCU's and tribally controlled community colleges 
expires July 1, 1994. Only one of Mississippi's HBCU's is on the list 
to become ineligible for Federal student loans beginning in July. 
However, 33 of the 104 HBCU's around the country would be ineligible to 
participate if the exemption is not extended.
  The bill will extend the exemption for 4 more years. By extending the 
exemption, these institutions would have more time to bring student 
default rates down through better internal procedures and student 
awareness of the obligation they have to repay the loans.
  It is important to note that despite high default rates, these 
institutions receive a relatively low volume of Federal student loan 
dollars, partially due to the low cost of attending these institutions. 
The General Accounting Office reported that of $13.5 billion in Federal 
students loan volume in fiscal year 1991, loans to students attending 
HBCU's totaled $372 million or less than 2.8 percent of the Federal 
student loans made that year. The CBO estimates that extending the 
exemption will cost $19 million over a 6-year period.
  I believe it is appropriate to extend this exemption through the life 
of the Higher Education Act amendments of 1992, and then we can take 
another look at it. I urge other Senators to support this legislation.

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