[Congressional Record Volume 142, Number 136 (Friday, September 27, 1996)]
[Senate]
[Page S11537]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




            SECTION 405 OF THE HIGHER EDUCATION ACT OF 1965

  Mr. MACK. Mr. President, I rise today to address a situation 
resulting from the Department of Education's interpretation of section 
435 of the Higher Education Act of 1965 [HEA] which has adversely 
impacted many schools in Florida and across the country. In 1990, 
Congress amended the act to prohibit institutions from continuing their 
participation in the Federal Family Education Loan [FFEL] Program if 
their cohort default rate is equal to or above the threshold percentage 
for the 3 consecutive years ``for which data is available.'' Along 
similar lines, this year Congress passed additional legislation which 
required that any school terminated from the FFEL program will no 
longer be eligible to receive Pell Grants for its students.
  However, the Department of Education has taken the position that this 
law will be enforced using default rate data for years 1991, 1992, and 
1993. Schools have already received their prepublished 1994 rates, many 
which are below the current threshold requirement, and some are even 
half of what they were in years prior. Despite this achievement, the 
Department has terminated or is currently terminating schools based on 
their 1991, 1992, and 1993 rate--not on their 1994 rate--because the 
Department does not consider the 1994 rate to be ``available'' until it 
is published. Based upon their technicality, the Department is 
essentially punishing schools which have implemented costly default 
management programs and achieved the desired result of the law--
reducing their cohort default rate.
  Mr. President, the intent of this law was for schools to educate 
their students about the importance of repaying their loans, and 
established a 3-year period within which a school must take proper 
measures to reduce its cohort default rate. It is perfectly acceptable 
for Congress to enact legislation to protect taxpayers from the costs 
associated with high default rates, and current law does so by 
requiring those involved in the Federal student loan process to educate 
students about the importance of repayment. However, I do not believe 
that Congress intended for schools which have reduced their default 
rate to be terminated from these programs.
  Given this late hour, it is unlikely that legislation addressing this 
situation will be enacted prior to the close of the 104th Congress. 
Therefore, I ask the Department to do everything in its power to use 
the most recent data when evaluating the eligibility status of these 
institutions. I thank the Chair and I yield the floor.

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