[Congressional Record Volume 143, Number 102 (Thursday, July 17, 1997)]
[Senate]
[Pages S7718-S7719]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ALLARD (for himself and Mr. Campbell):
  S. 1036. A bill to amend section 435(d)(1)(A)(ii) of the Higher 
Education Act of 1965 with respect to the definition of an eligible 
lender; to the Committee on Labor and Human Resources.


                             kid's bank act

  Mr. ALLARD. Mr. President, I am pleased to introduce legislation 
amending the Higher Education Act to revise the proportion of student 
loans that a bank can maintain in relation to their total consumer 
portfolio. This bill will allow the Young Americans Bank to continue 
providing a unique opportunity for young people to learn to control a 
checking account, save for the future, and manage credit obligations. 
The bank has had resounding success in teaching young clients how to 
responsibly handle their finances.
  The Young Americans Bank has been operating for ten years as the only 
bank in the nation that exclusively serves young people under the age 
of 22. It is a full service, State chartered, federally insured bank 
with almost 17,000 customers from all 50 States and 11 foreign 
countries. Another exceptional element of the bank is that its holding 
company, the Young American Education Foundation, is the only nonprofit 
holding company in the country.
  While educating our youth on how to make responsible financial 
decisions, the Young Americans Bank also has a natural demand for 
student loans. Section 435 of the Higher Education Act prohibits banks 
from having student loans comprise more than 50 percent of total loans. 
Clearly this prohibits the Young Americans Bank from accommodating the 
large percentage of student loans that they would like to provide for 
their young clients. It is also important to note that allowing the 
bank to carry a larger student loan portfolio would improve the bank's 
financial performance, which in turn would provide more funds for 
educational programming.
  My legislation would allow very small, nonprofit banks to exceed the 
50-percent student loan ratio. The exception would apply only to 
institutions with a total outstanding student loan volume of $10 
million or less, and all loans would have to be made to those age 22 
and under.
  The Young Americans Bank enjoys broad support, and I have received 
letters endorsing this legislation from Denver's Mayor Wellington Webb, 
the Colorado Bankers Association, the Colorado Governor's office and 
numerous financial institutions and universities.
  The operation and objectives of the Young Americans Bank should not 
be limited. This bank does an outstanding

[[Page S7719]]

job of providing financial and educational opportunities to young 
people, and I encourage my colleagues to support their mission and 
encourage the expansion of such a successful institution.
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