[Congressional Record Volume 140, Number 38 (Tuesday, April 12, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: April 12, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
STUDENT LOAN INELIGIBILITY FOR CERTAIN INSTITUTIONS OF HIGHER EDUCATION

  Mr. FORD of Michigan. Mr. Speaker, I move to suspend the rules and 
pass the Senate bill (S. 2004) to extend until July 1, 1998, the 
exemption from ineligibility based on a high default rate for certain 
institutions of higher education.
  The Clerk read as follows:

                                S. 2004

       Be it enacted by the Senate and House of Representatives of 
     the United States of America 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''.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Michigan [Mr. Ford] will be recognized for 20 minutes, and the 
gentleman from Wisconsin [Mr. Petri] will be recognized for 20 minutes.
  The Chair recognizes the gentleman from Michigan [Mr. Ford].
  Mr. FORD of Michigan. Mr. Speaker, I yield myself such time as I may 
consume.
  (Mr. FORD of Michigan asked and was given permission to revise and 
extend his remarks.)
  Mr. FORD of Michigan. Mr. Speaker, S. 2004 is designed to extend the 
existing exemption from the default triggers for Historically Black 
Colleges and Universities [HBCU's] and tribally controlled community 
colleges. Without this extension the triggers would force the cut off 
of institutional eligibility for Federal Family Education Loan 
programs. The bill was passed by unanimous consent by the Senate on 
March 25 of this year.
  This extension would shift the expiration date for the exemption from 
July 1, 1994, to July 1, 1998. This change would realign the expiration 
of this provision with the scheduled reauthorization of the Higher 
Education Act of 1965.
  The legislation would also allow HBCU institutions to proceed with 
their current effort to take control of their financial management and 
default situations with an aggressive federally assisted internal 
review and training program.
  This legislation is the companion piece to H.R. 4025, which was 
introduced by Representative Scott of Virginia. He is a new and value 
member of the Committee on Education and Labor and I applaud his active 
role in the development and support of this important measure.
  I ask the House to support the passage of this bill so that the 
students who attend these institutions will continue to have access to 
the assistance provided under the authority of title IV of the Higher 
Education Act of 1965. The particularly high-risk populations that the 
HBCU's and the tribally controlled community colleges successfully 
reach out to are deserving of the extension of this exemption. It is 
critical for this extension to be done in a timely manner in order to 
avoid the unnecessary disruptions which would occur if no extension 
were agreed to. The current estimate is that at least 33 of the 105 
HBCU's would lose eligibility and a similar percentage of the tribally 
controlled community colleges would be affected.
  The legislation before us today is a clean extension of this 
authority. No extraneous amendments have been attached by the other 
body and we do not seek to add any. This exemption has been in the law 
since the creation of the default triggers during the Budget 
Reconciliation process in 1990. There is broad, bipartisan agreement in 
both Houses as to the merit of its extension.
  I ask that the House agree to this measure and send it to the 
President for his immediate consideration.
  Mr. Speaker, I reserve the balance of my time.
  Mr. PETRI. Mr. Speaker, I yield myself such time as I may consume.
  S. 2004, which passed the other body by voice vote, would extend the 
current exemption from elimination from the Federal Student Loan 
Program, for historically black colleges and universities, tribally 
controlled community colleges, and Navajo community colleges, for 4 
additional years.
  Without this extension the current exemption, which was granted to 
these institutions in the Omnibus Budget Reconciliation Act of 1990, 
will expire on July 1st of this year.
  There are now 104 Historically Black Colleges and Universities and 9 
tribally controlled community colleges. Without this extension about a 
third of these institutions may lose their eligibility for 
participation in the Federal Student Loan Program.
  This bill, as passed by the other body, is a clean bill. It does not 
affect any other higher education amendments.
  Mr. Speaker, I reserve the balance of my time.
  Mr. FORD of Michigan. Mr. Speaker, I yield 4 minutes to the gentleman 
from Virginia [Mr. Scott], a member of the committee.
  Mr. SCOTT. Mr. Speaker, I am pleased to rise in support of S. 2004, a 
bill to extend the exemption currently granted to historically black 
colleges and universities, tribally controlled colleges, and Navajo 
community colleges, from ineligibility for the Federal Family Education 
Loan Program.
  On July 1, 1994, the present exemption from this program will expire. 
At the current default trigger of 25 percent, as many as one-third on 
the Nation's historically black colleges, and many of the Native 
American colleges, will be excluded from the FFELP. If these schools 
cannot participate in the loan program, many of the students that these 
schools serve will be denied a primary source of financial aid, one 
that helps pay the fare to a better way of life. It goes without 
saying, Mr. Speaker, that such action will also have devastating 
repercussions for the schools: many will have to close, limiting the 
options of many students who wish to attain a college degree.
  Mr. Speaker, the institutions that are currently exempted from the 
FFELP default trigger have served lower income and minority students 
for generations. The mission of these schools is to grant opportunities 
to those who have the least. Ironically, it is for this very reason 
that many of these institutions find themselves struggling to help 
students to improve upon their loan repayment performance. These 
students often have greater debts and more pressing family financial 
obligations than middle- or higher-income students; they therefore must 
work hard to meet student loan obligations and address other financial 
burdens. But these students should not be denied a chance to succeed, 
even though their odds are longer than most.

  Mr. Speaker, these institutions have demonstrated, to their credit, 
that when disadvantaged students are given an opportunity, most will 
succeed brilliantly. In many States, for example, over half of the 
States' African-American doctors, lawyers, and other professionals are 
graduates of historically black colleges. It therefore makes little 
sense to limit financial aid and hinder these promising and talented 
students from achieving their full potential.
  Mr. Speaker, the minority-serving institutions that are exempted from 
the loan default trigger are not seeking a free ride for their 
students. These institutions, and their student financial aid officers, 
are working hard to improve student loan repayments. Through an 
innovative program of self-help workshops, financial aid management 
seminars, and financial counseling, many of these schools are already 
seeing reductions in default rates.

                              {time}  1400

  It is clear, however, that in addition to extending the exemption, 
criteria for exclusion from the FFELP must eventually be changed. It is 
inherently unfair to compare the default rates of schools that enroll 
primarily lower-income students with those that enroll primarily 
middle- and upper-income students. I would encourage my colleagues to 
work with me in the future to develop new legislation that would take 
into account a range of other factors that will more accurately attack 
the problem of loan mismanagement, fraud, and abuse.
  Mr. Speaker, I would like to commend Senator Bumpers and his 
colleagues who supported S. 2004, and I would like to commend the 
gentleman from Michigan [Mr. Ford] chairman of the Committee on 
Education and Labor, for having the bill considered in an expedited 
manner so it can be considered prior to the July 1st deadline.
  Mr. Speaker, I urge my colleagues to act affirmatively and vote to 
extend this exemption so those institutions may continue the tradition 
of providing opportunities where few might otherwise exist.
  Mr. PETRI. Mr. Speaker, I yield 5 minutes to the hard-working 
gentleman from Ohio [Mr. Boehner], a member of the Committee on 
Education and Labor.
  Mr. BOEHNER. Mr. Speaker and my colleagues, I rise today somewhat 
reluctantly to oppose this legislation.
  Mr. Speaker, this exemption that was put in the law of years ago gave 
historically black colleges and other colleges in a narrow area on 
Indian reservations time to bring their default rates into line with 
the requirements that we imposed on all colleges, universities, and 
others who qualify under the college loan program.
  Here we are today, wanting to continue that exemption for an 
additional 4 years. I rise reluctantly because I understand that these 
colleges and universities do in fact serve perhaps a predominantly 
larger portion of disadvantaged students, but there are a lot of 
universities, colleges, and other schools that are involved in these 
programs that serve disadvantaged students.
  The law in America is rather clear. We support and the law states 
emphatically that it should be about opportunity for all. What is 
happening here is that we are giving another small group of Americans, 
a small group of the universities in America, an opportunity here, an 
advantage that other colleges and universities and schools that qualify 
under these programs are not getting. I, as a Member of this body, feel 
compelled to rise today and oppose this legislation, and reiterate that 
what we want to stand for in this body is, again, equal opportunity for 
all, special privileges for none.
  Mr. FORD of Michigan. Mr. Speaker, I yield such time as he may 
consume to the gentleman from Michigan [Mr. Kildee], chairman of the 
Subcommittee on Elementary, Secondary, and Vocational Education of the 
Committee on Education and Labor, for a colloquy.
  Mr. KILDEE. Mr. Speaker, I thank the gentleman for yielding time to 
me.
  Mr. Speaker, I would like to engage the gentleman from Michigan [Mr. 
Ford] in a colloquy to discuss the Department of Education's 
interpretation of congressional intent on the Higher Education Act's 
title IV institutional eligibility appeals based on mitigating 
circumstances.
  It is my understanding, Mr. Speaker, that since 1987, when the basis 
for appealing defaults was changed, no school has successfully appealed 
title IV eligibility through the mitigating circumstances process.
  Mr. Speaker, I am deeply concerned that many of these schools, which 
in many cases serve the same at-risk population as the HBCU's, are not 
receiving fair treatment by the Department of Education.
  I believe the current standards need to be reviewed to ensure that 
they are reasonable standards for schools to meet. My primary concern 
is that no school can meet the Department's regulation.
  I believe it was Congress intent that the Department of Education 
establish regulations that would allow some schools to meet the 
criteria.
  Mr. Speaker, I would ask the gentleman from Michigan [Mr. Ford] to 
join me in calling on the Department of Education to review these 
regulations to ensure they are fair and reasonable, and report their 
findings back to the House Education and Labor Committee.
  Mr. FORD of Michigan. Will the gentleman yield?
  Mr. KILDEE. Yes, I yield to the gentleman from Michigan.
  Mr. FORD of Michigan. Mr. Speaker, I would say to the gentleman that 
I know he has expressed his concerns on this to me on more than one 
occasion. I share those concerns. I would be pleased to join the 
gentleman in requesting that the department review these regulations to 
ensure their fairness.
  I would like to remind the Members that this was a bone of contention 
between our committee and the previous administration under Lamar 
Alexander, who was enamored of the idea of automatic cutoffs for 
student aid because of loan defaults. We tried without success to 
convince him that the diversity we had in institutions and the types of 
institutions that drew a population that were predictably going to have 
trouble paying loans back was such that a rigid, one-size-fits-all 
program would not work.
  The cutoff that we have been talking about was not put in the 
legislation by the committee, it was put in by excited people out here 
on the floor, who waved around the bloody banner of student loan 
defaults, suggesting that students who could pay their loans were not 
paying them back, and that is how it got into the legislation. However, 
the regulations the gentleman is talking about were written by the same 
Department of Education that advocated a rigid cutoff with no 
exceptions from the very beginning.
  Mr. Speaker, I will urge Secretary Reilly to use the power that he 
has to rewrite those regulations so that they make some sense.
  Mr. KILDEE. I thank the gentleman.
  Mr. FORD of Michigan. Mr. Speaker, I yield such time as he may 
consume to the gentleman from Montana [Mr. Williams], chairman of the 
subcommittee.
  Mr. WILLIAMS. Mr. Speaker, I am in support of this legislation. I 
sponsored the original waiver for tribal colleges and historic black 
colleges. We did that in the 1990 budget reconciliation bill, and it is 
important that my colleagues understand that we placed the student 
default rate cutoff at that time at 35 percent.
  We thought that was a fairly tough measure, Mr. Speaker, but it was 
driven more by budgetary reasons than it was, in my opinion, by sound 
public policy. Nonetheless, I sponsored it. I think we all have to ask 
ourselves whether default rates are an adequate measure of whether a 
school is doing a good job, or are default rates a measure of whether 
or not a student comes out of college and gets a job and has a salary 
and therefore can pay their loan back.
  I question that this is the right kind of mechanism to use in any 
event. However, we have a budget deficit and we are trying to cut 
costs, we are trying to make sure we spend less money on defaults and 
more money actually for the students, so we put this cutoff at 35 
percent.
  We adopted that as the rate to save some money. In doing so, Mr. 
Speaker, I believe that tribal colleges and historic black colleges 
should be given some additional time to get their student loan program 
in order, and so we set the 35 percent student default cutoff rate. The 
Senate agreed with us on my proposal.
  Now, Mr. Speaker, through other legislation we have reduced that 
cutoff rate to 25 percent, so what has happened, schools that have been 
fighting their way to get down to 35 percent, and they are doing a 
wonderful job at getting down, are now suddenly faced with 25 percent.
  When I say they are doing a wonderful job, let me be a little more 
specific than that. Let me tell about a tribally controlled college out 
in Montana called the Salish Kootenai College.
  They had a 49.6 percent default rate back when we were first trying 
to get these things under control. They had 87 borrowers in default, 
and the college's president, a wonderful fellow who was at one time 
designated Indian Educator of the Year in America, and his great staff 
have been working ever since the Williams cutoff rate went into effect. 
They have reduced their default rate from almost 50 percent down to 
about 27 percent.

                              {time}  1410

  And they are really doing great things to get this default rate down 
and they got it below the 35 percent we required. Now, bang, we are 
down to 25 percent. They are going to get cut off. Those Indian kids 
are not going to have these college student loans they thought and the 
president of the college and the staff thought they could have under 
the law.
  So, the question is are we going to penalize them now inadvertently 
for what they have already been able to achieve or are we going to 
reward them. And this legislation today says let us reward them by 
extending a waiver for tribal colleges and historically black colleges, 
but let us only do it through the life of the Higher Education Act, 
just that far. And that will give us all a chance to review how the 
provisions are working to allow these educators to continue to work to 
try to get these default rates down, to track these young people that 
come out of school better to help them get jobs.
  It will also tell the students themselves how sincere we are about 
them paying back this money.
  Let us not punish the schools for the success they have made. 
Historically black colleges and the tribally controlled community 
colleges are doing a good job since we put in the new default rate 
cutoff. They are really trying hard. They are getting there, but 
suddenly the rules have changed. Instead of a 35 percent default rate 
cutoff like we told them, it has gone down to 25, and I am just saying 
let us not penalize them for that. They were operating under a 
different set of rules. Let us give them a little more time to continue 
the good work they were doing and still allow the students that choose 
to go to those schools, almost exclusively Americans who are important 
and critical and vital minority students. Let us allow those students 
to continue to get those loans as their advisors and their parents and 
the staff work with them on trying to reduce these default rates.
  I want to say to my friend, the chairman of the Education and Labor 
Committee, that there is nobody in this Chamber or I guess listening to 
us that has worked harder, been more of a legislative student or has a 
better understanding of the Higher Education Act, and the importance of 
it to the students of this country and to the future than Bill Ford, 
and I have been more than pleased to serve as chairman of the 
Subcommittee on Postsecondary Education and try to follow in the great 
tracks that Bill Ford has made during his years as chairman of that 
subcommittee. If I may go out of the rules a little bit and refer to 
the gentleman as Bill, which I do when we are off the floor, I want you 
to know, Bill, how much this country owes to you and the work you have 
done for higher education in this country. The gentleman has been a 
class act and an example for all of the Members of Congress that will 
follow. And you have our thanks, Mr. Chairman.
  Mr. PETRI. Mr. Speaker, I yield 7 minutes to our colleague, the 
gentleman from Ohio [Mr. Boehner].
  Mr. BOEHNER. Mr. Speaker, I thank my good friend from Wisconsin for 
yielding the time.
  Mr. Speaker, I refer to the comments made by the gentleman from 
Montana [Mr. Williams], with regard to extending this exemption. The 
exemption was put into the 1990 act to give historically black colleges 
and tribunal colleges extra time to meet those regulations.
  I guess the question I have for the gentleman from Montana [Mr. 
Williams], since he brought this up, is what justification exists that 
we should grant this exemption for these colleges and not many other 
colleges, universities and schools that provide education to minority 
students, that may have already been eliminated from the program 
because their default rate was too high.
  Second, what is being done by these colleges and universities to 
improve their default rate? I would think that if we are going to bring 
such a bill to the floor to extend this exemption for another 4 years 
there would be some evidence given as to why more time is needed, what 
progress has been made and what steps are being taken, and what about 
the students who do go to universities, colleges, private schools that 
are disadvantaged students who have already been eliminated from 
programs because their colleges did not meet the default rates and have 
been eliminated from the program?
  Mr. WILLIAMS. Mr. Speaker, will the gentleman yield?
  Mr. BOEHNER. I am happy to yield to the gentleman from Montana.
  Mr. WILLIAMS. Mr. Speaker, I guess the logical result of the 
gentleman's question is that we should support doing this for every 
school and every student. Does the gentleman support that as a antidote 
to the difficulties he sees here?
  Mr. BOEHNER. What I am trying to find out is why we should treat this 
group of colleges and universities differently than we have treated a 
lot of others, many who have been eliminated from the program.
  Mr. WILLIAMS. As I said when I sponsored this amendment, we had an 
administration that believed a cutoff rate was the appropriate thing to 
do. I thought it would reduce the deficit, potentially at least I 
thought it would save us some dollars. But I was not sure it was good 
public policy.
  I knew it was bad public policy for colleges who because of the 
history of the type of student, particularly the income level of the 
students they treat we could identify them as simply not able to meet 
these default rates.
  Now I fought in committee and in that conference committee against 
doing it at all to any school. But as long as we were going to do it, I 
took the best of a bad deal and tried to improve on it by at least 
protecting young Americans of color from the worst of what would happen 
to them.
  Now the bad thing that is going to happen to them is inadvertent. I 
do not think anybody intended it. And now I am trying to protect them 
against having that inadvertent thing happen to them, which is going 
from 25 to 35 percent.
  Mr. BOEHNER. Mr. Speaker, I appreciate the gentleman from Wisconsin 
yielding more time, and maybe the chairman of the committee could help 
answer the questions that I have outlined to the gentleman from Montana 
[Mr. Williams] about what these colleges and universities are doing to 
improve their default rate, and the justification for continuing this 
exemption that has been in effect for, will be in effect for 4 years. 
What have they done and why do we need to continue it?
  Mr. FORD of Michigan. Mr. Speaker, will the gentleman yield?
  Mr. BOEHNER. I am happy to yield to the gentleman from Michigan.
  Mr. FORD of Michigan. Mr. Speaker, I thank the gentleman for 
yielding. If the gentleman was on the floor, and I believe he was, when 
I engaged in a colloquy with the gentleman from Michigan [Mr. Kildee], 
we discussed specifically what we expect the administration to do. The 
previous administration believed that an arbitrary set of numbers told 
you something. We never have believed that it told you anything because 
it totally ignores the type of students that you are dealing with.
  I have been at this long enough so that I can look at the makeup by 
race and economic characteristics on the census and tell the gentleman 
the default rate of a school before you tell me what they teach, 
whether it is a trade school or medical school or anything else. There 
is a stronger correlation between being poor when you go to college and 
not being able to pay your loan than there is between where you finish 
with respect to your peers in school. If you go to college from a poor 
family and an impoverished background, a culturally and economically 
disadvantaged student will do better than one that does not go to 
college but he will never do as well as your child and mine, given the 
same opportunities, because he will never get the same opportunities. 
There are exceptions of course that prove the rule.
  By and large, they do not get a shot at the good jobs when they get 
out of college and they do not have an uncle's law firm to go into or 
daddy's company to go to work for. They have to start right at the 
bottom of the barrel and they are unable to pay the loans back.
  Mr. BOEHNER. Reclaiming my time, I understand what the chairman is 
saying, but neither of the questions that I have posed to the gentleman 
from Michigan, the chairman of the committee, nor to the gentleman from 
Montana [Mr. Williams], have really been answered in terms of why we 
should continue the exemption and what specific actions have been taken 
and what specific actions are going to the taken over the next 4 years 
to justify the continuation of this.
  Now I might say to the gentleman from Michigan that I have 11 
brothers and sisters I have worked my way through college, as I suspect 
the chairman of this committee has worked his way through college. And 
it really has very little bearing on the institution itself.
  Part of the problem here and the reason I raise this question is 
because the way the program is set up, the universities get to check 
the possibility of repayment as a student gets into the program. But 
once that student is out of the university, the university's ability to 
bring that default rate down is almost nonexistent.

                              {time}  1420

  The real problem with the program is that we have got to redesign the 
program to put the universities in a stronger role so that they can 
have some assurance, some guarantee, over their future in trying to 
control their own default rate. And today I would suggest to the 
gentleman from Michigan that the universities' and colleges' hands are 
being tied in their ability to reduce their own default rates.
  Mr. FORD of Michigan. Mr. Speaker, I yield myself 1 minute just to 
say to the gentleman that the staff is reminding me that the gentleman 
voted against the direct lending program that we passed through this 
Congress that will save the taxpayers a lot of money and will guarantee 
that loans are available to every student no matter where they go to 
school. The gentleman did not choose to support that legislation 
because the previous administration opposed it, and he is still in gear 
with the previous administration and cannot shift.
  When that program is fully implemented in 1999, this problem will 
take care of itself.
  Mr. BOEHNER. Mr. Speaker, will the gentleman yield?
  Mr. FORD of Michigan. I am happy to yield to the gentleman from Ohio.
  Mr. BOEHNER. Mr. Speaker, the gentleman is correct. I voted against 
the direct lending program because I am concerned that we are going to 
end up with higher default rates under that program than we have gotten 
under this program, and to extend this exemption for another 5 years, I 
think, is unwarranted, nor has there been any evidence given on this 
floor as to why it should continue.
  Mr. FORD of Michigan. Mr. Speaker, I yield 1 minute to the gentleman 
from New Mexico [Mr. Richardson].
  (Mr. RICHARDSON asked and was given permission to revise and extend 
his remarks.)
  Mr. RICHARDSON. Mr. Speaker, I rise today to express my strong 
support for extending the College Loan Default Exemption Act.
  I am pleased this legislation includes extending the college loan 
default exemption to tribally controlled Indian community colleges. 
Default rate limitations were originally included in the 1990 Omnibus 
Budget Reconciliation Act to put an end to student loan abuses by a few 
private trade schools.
  The loan default limitation inadvertently excluded historically black 
colleges and universities and tribally controlled Indian community 
colleges, particularly those on the Navajo Reservation, Navajo 
Community College.
  Although tribally controlled Indian community colleges have 
significantly decreased their default rates since 1990, they need 
additional time to implement administrative reforms and establish 
special peer counseling systems designed to reduce fault rates.
  Mr. Speaker, I firmly believe that this bill will give tribally 
controlled community colleges the time and structure that they need to 
design and implement programs that would lower their loan default rates 
and not deprive any native American student from the Federal aid that 
they need to further their education.
  Mr. FORD of Michigan. Mr. Speaker, I yield myself 1 minute.
  Mr. Speaker, I want to thank the minority on the Committee on 
Education and Labor for their cooperation in getting this bill swiftly 
to the floor so that we could meet the deadline that is so important to 
the schools involved and just state for the record that for those who 
think that the default rate is going to be worse in the future, they 
ought to look to the Republican who is on the floor handling this bill 
now for their side. Because we supported his idea of having Internal 
Revenue collect the loans from people who make loans from the 
Government in the future on a direct loan program.
  If you think that you do not have to pay taxes you owe to the Federal 
Government through IRS, then you will not have to pay your direct loan 
either, and they are going to treat you the same way if you do not pay.
  Mr. Speaker, I have no further requests for time, and I yield back 
the balance of my time.
  Mr. PETRI. Mr. Speaker, I have no further requests for time, and I 
yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Mazzoli). The question is on the motion 
offered by the gentleman from Michigan [Mr. Ford] that the House 
suspend the rules and pass the Senate bill, S. 2004.
  The question was taken.
  Mr. BOEHNER. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 5 of rule I and the 
Chair's prior announcement, further proceedings on this motion will be 
postponed until tomorrow.

                          ____________________