[Congressional Record Volume 143, Number 142 (Tuesday, October 21, 1997)]
[House]
[Pages H8845-H8850]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
EMERGENCY STUDENT LOAN CONSOLIDATION ACT OF 1997
Mr. McKEON. Madam Speaker, I move to suspend the rules and pass the
bill (H.R. 2535) to amend the Higher Education Act of 1965 to allow the
consolidation of student loans under the Federal Family Loan Program
and the Direct Loan Program, as amended.
The Clerk read as follows:
H.R. 2535
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; REFERENCE.
(a) Short Title.--This Act may be cited as the ``Emergency
Student Loan Consolidation Act of 1997''.
(b) References.--Except as otherwise expressly provided,
whenever in this Act an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other
provision, the reference shall be considered to be made to a
section or other provision of the Higher Education Act of
1965 (20 U.S.C. 1001 et seq.).
SEC. 2. LOAN CONSOLIDATION PROVISIONS.
(a) Definition of Loans Eligible for Consolidation.--
Section 428C(a)(4) (20 U.S.C. 1078-3(a)(4)) is amended--
(1) by redesignating subparagraphs (C) and (D) as
subparagraphs (D) and (E), respectively; and
(2) by inserting after subparagraph (B) the following new
subparagraph:
``(C) made under part D of this title, except that loans
made under such part shall be eligible student loans only for
consolidation loans for which the application is received by
an eligible lender during the period beginning on the date of
enactment of the Emergency Student Loan Consolidation Act of
1997 and ending on October 1, 1998;''.
(b) Terms of Consolidation Loans.--Section
428C(b)(4)(C)(ii) is amended--
(1) in subclause (I), by inserting after ``consolidation
loan'' the following: ``for which the application is received
by an eligible lender before the date of enactment of the
Emergency Student Loan Consolidation Act of 1997, or on or
after October 1, 1998,'' ;
(2) by striking ``or'' at the end of subclause (I);
(3) by inserting ``or (II)'' before the semicolon at the
end of subclause (II);
(4) by redesignating subclause (II) as subclause (III); and
(5) by inserting after subclause (I) the following new
subclause:
``(II) by the Secretary, in the case of a consolidation
loan for which the application is received by an eligible
lender on or after the date of enactment of the Emergency
Student Loan Consolidation Act of 1997 and before October 1,
1998, except that the Secretary shall pay such interest only
on that portion of the loan that repays Federal Stafford
Loans for which the student borrower received an interest
subsidy under section 428 or Federal Direct Stafford Loans
for which the borrower received an interest subsidy under
section 455; or''.
(c) Nondiscrimination in Loan Consolidation.--Section
428C(b) is amended by adding at the end the following new
paragraph:
``(6) Nondiscrimination in Loan Consolidation.--An eligible
lender that makes consolidation loans under this section
shall not discriminate against any borrower seeking such a
loan--
``(A) based on the number or type of eligible student loans
the borrower seeks to consolidate;
``(B) based on the type or category of institution of
higher education that the borrower attended;
``(C) based on the interest rate that is authorized to be
collected with respect to the consolidation loan; or
``(D) with respect to the types of repayment schedules
offered to such borrower.''.
(d) Interest Rate.--Section 428C(c)(1) is amended--
(1) in the first sentence of subparagraph (A), by striking
``(B) or (C)'' and inserting ``(B), (C), or (D)''; and
(2) by adding at the end the following new subparagraph:
``(D) A consolidation loan for which the application is
received by an eligible lender on or after the date of
enactment of the Emergency Student Loan Consolidation Act of
1997 and before October 1, 1998, shall bear interest at an
annual rate on the unpaid principal balance of the loan that
is equal to the rate specified in section 427A(f), except
that the eligible lender may continue to calculate interest
on such a loan at the rate previously in effect and defer,
until not later than April 1, 1998, the recalculation of the
interest on such a loan at the rate required by this
subparagraph if the recalculation is applied retroactively to
the date on which the loan is made.''.
(e) Amendments Effective for Pending Applicants.--The
consolidation loans authorized by the amendments made by this
section shall be available notwithstanding any pending
application by a student for a consolidation loan under part
D of title IV of the Higher Education Act of 1965, upon
withdrawal of such application by the student at any time
prior to receipt of such a consolidation loan.
SEC. 3. ADMINISTRATIVE EXPENSE REDUCTIONS.
Section 458(a)(1) (20 U.S.C. 1087h(a)(1)) is amended by
striking ``$532,000,000'' and inserting ``$507,000,000''.
SEC. 4. TREATMENT OF TAX BENEFITS.
(a) Family Contribution for Dependent Students.--
(1) Parents' available income.--Section 475(c)(1) is
amended--
(A) by striking ``and'' at the end of subparagraph (D);
(B) by striking the period at the end of subparagraph (E)
and inserting ``; and''; and
(C) by adding at the end the following new subparagraph:
``(F) the amount of any tax credit taken by the parents
under section 25A of the Internal Revenue Code of 1986.''.
(2) Student contribution from available income.--Section
475(g)(2) is amended--
(A) by striking ``and'' at the end of subparagraph (C);
(B) by striking the period at the end of subparagraph (D)
and inserting ``; and''; and
(C) by inserting after subparagraph (D) the following new
subparagraph:
``(E) the amount of any tax credit taken by the student
under section 25A of the Internal Revenue Code of 1986.''.
(b) Family Contribution for Independent Students Without
Dependents Other Than a Spouse.--Section 476(b)(1)(A) (20
U.S.C. 1087pp(b)(1)(A)) is amended--
(1) by striking ``and'' at the end of clause (iv); and
(2) by inserting after clause (v) the following new clause:
``(vi) the amount of any tax credit taken under section 25A
of the Internal Revenue Code of 1986; and''.
(c) Family Contribution for Independent Students With
Dependents Other Than a Spouse.--Section 477(b)(1) (20 U.S.C.
1087qq(b)(1)) is amended--
(1) by striking ``and'' at the end of subparagraph (D);
(2) by striking the period at the end of subparagraph (E)
and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(F) the amount of any tax credit taken under section 25A
of the Internal Revenue Code of 1986.''.
(d) Total Income.--Section 480(a)(2) (20 U.S.C.
1087vv(a)(2)) is amended--
[[Page H8846]]
(1) by striking ``individual, and'' and inserting
``individual,''; and
(2) by inserting ``and no portion of any tax credit taken
under section 25A of the Internal Revenue Code of 1986,''
before ``shall be included''.
(e) Other Financial Assistance.--Section 480(j) is amended
by adding at the end the following new paragraph:
``(4) Notwithstanding paragraph (1), a tax credit taken
under section 25A of the Internal Revenue Code of 1986 shall
not be treated as estimated financial assistance for purposes
of section 471(3).''.
The SPEAKER pro tempore. Pursuant to the rule the gentleman from
California [Mr. McKeon] and the gentleman from Michigan [Mr. Kildee],
each will control 20 minutes.
The Chair recognizes the gentleman from California [Mr. McKeon].
Mr. McKEON. Madam Speaker, I yield myself such time as I may consume.
Madam Speaker, I rise in support of the Emergency Student Loan
Consolidation Act of 1997 and urge its immediate passage.
Madam Speaker, this bill is the first in a series of education bills
that Members of our party will bring to the floor this week. Already
this year the House Republicans have passed bills that will make our
schools safer, train Americans for high-paying jobs and educate
disabled children and make college more affordable.
Now, over the next 2 weeks, Americans will see the House of
Representatives vote on a series of innovative education bills
introduced by Republicans. These are dramatic efforts, not old, tired
Federal programs from Washington. Our bills will help children read,
send dollars directly to the classroom, and assist families in saving
for the high cost of education. Our bills also will empower low-income
families with new parental choice, scholarships and launch new
innovative charter schools.
The bill I support today will help college students and recent
graduates who are caught in a credit crunch created by the U.S.
Department of Education. On September 24, 1997, when I, along with the
gentleman from Pennsylvania [Mr. Goodling] and the gentleman from Ohio
[Mr. Boehner] introduced this legislation, the Department of Education
was facing a backlog of more than 80,000 applications for Direct
Student Loan consolidations, and had stopped accepting new applications
for loan consolidations altogether. Many of these borrowers had waited
months for their applications to be processed. Today, over 30,000 are
still waiting and another 35,000 have simply given up and been dropped
out of the process.
Countless thousands more need to consolidate their student loan debt
but have been told to wait until the Department begins accepting
applications again.
The legislation before us today will provide these borrowers with
immediate relief. The Emergency Student Loan Consolidation Act will
allow borrowers to consolidate direct student loans into FFEL
consolidation loans. The interest rate for all new consolidation loans
will be identical to the rate in the Direct Loan Program and borrowers
who consolidate subsidized loans will not lose their deferment benefits
simply because they consolidate their loans.
In addition, thanks to an amendment offered in committee by our
colleague, the gentleman from Michigan [Mr. Kildee], and our colleague,
the gentleman from Missouri [Mr. Clay], this legislation makes urgently
needed technical changes to the need analysis provisions found in the
Higher Education Act. These changes will ensure that low- and middle-
income families who receive the benefits of the education tax credits
provided for in the Taxpayer Relief Act of 1997 will not be penalized
with respect to their eligibility for financial aid in future years.
Making these changes now will allow the Department of Education to
begin the process of revising its forms and procedures for the 1999
academic year well in advance so that students and families will not
encounter delays in the processing of their applications for financial
aid.
While many of us still have doubts about the long-term viability of
the Direct Student Loan Program and the Department's ability to manage
it, this legislation is not about direct loans or guaranteed loans or
which program is better. It is about helping students who are currently
unable to obtain a consolidation loan through the Direct Loan Program.
These are students who may pay hundreds or even thousands of dollars
in additional interest costs, who may have serious difficulty in
securing other credit such as a mortgage, and who may even default on
their student loans if we do not act now to offer them an alternative
to the Direct Loan Program.
The alternative offered under the Emergency Student Loan
Consolidation Act will also take some of the pressure off of the
Department of Education. We do not want the Department to hastily try
to fix the current system problems only to cause more delays and
problems in the future.
One graduate from the Boston University School of Law was delighted
to have received a Direct Consolidation Loan after 8 months of waiting.
However, when the direct loan servicing center began sending her bills
and charging her interest on a $57,000 consolidation loan when it
should have been a $37,000 consolidation loan, she was not too happy.
Mistakes such as this will continue to occur if the Department attempts
to hurriedly process all the pending applications without first
ensuring that the applications are being processed correctly.
This is emergency legislation, so these changes will only remain in
effect until September 30, 1998. However, I want to assure lenders that
step in to help students and the Department during this crisis that we
realize that every time we change the law, it also requires changes in
the way we do business. We will be reviewing the changes included in
this legislation for inclusion in our authorization of the Higher
Education Act.
The cost of this legislation will be paid for by reducing the section
458 administrative funds available to the Department of Education and
for the Direct Loan and the FFEL programs by $25 million in fiscal year
1998. Statements made by the Assistant Secretary for Postsecondary
Education and others at the Department about being unable to administer
the Direct Loan Program without the $25 million are very troubling.
The Department's fiscal year 1998 budget proposal for section 458
requested an increase of $41 million with 75 percent of the increased
funds or $30 million needed as a result of the growth in the Direct
Loan Program. However, with the net gain of only one school
participating in the fourth year of the program, it is difficult to
imagine why the Department would need another $30 million in order to
manage this program.
I would also note that the administration has expressed concerns that
private sector lenders might discriminate against some borrowers when
making these loans. I want to point out that the legislation before us
today contains antidiscrimination provisions. This is a change from the
legislation reported from the committee to specifically address these
concerns.
Unfortunately, for many students, this bill does not go far enough.
It does not require the Department and its contractor to reimburse
students for the additional interest they have been charged while
waiting for this mess to be resolved. The Secretary should look into
that possibility. The Secretary should also look into the quality of
the information being provided to students. The students who testified
at our hearing expressed a total lack of confidence in the Department's
ability to provide quality customer service and accurate information.
Additionally, a while back I spoke with a constituent, David Higbee,
a recent law school graduate. He had written me a letter about his
concerns with the direct loan consolidation process. In the letter he
said, ``we quickly received an estimate from Sallie Mae on the portion
of our student loans we were refinancing there. The Department of
Education was slow and refused every reasonable suggestion to expedite
its inadequate customer service process.''
I am inclined to believe David and the other students who testified
before us. I am inclined to help them and others like them with their
similar stories. This bill will provide these borrowers with immediate
emergency relief, which is the right thing to do.
Finally, I want to thank my colleagues on both sides of the aisle for
[[Page H8847]]
supporting this effort. I particularly want to thank the gentleman from
Ohio [Mr. Boehner], for his active participation in addressing this
problem. I also want to thank the gentleman from Missouri [Mr. Clay],
and the gentleman from Michigan [Mr. Kildee], for their efforts in
bringing a bipartisan bill before the committee and the gentleman from
New Jersey [Mr. Andrews], for his recommendation that we specifically
ensure that the students caught in the current delays have the final
say in deciding whether they obtain a consolidation loan. I am happy
that we were able to address his concern in the committee.
I urge my colleagues to support this emergency legislation and
provide immediate relief to student loan borrowers trapped by the
shutdown of the direct student loan consolidation process. I urge a
``yes'' vote on this Emergency Student Loan Consolidation Act of 1997.
Madam Speaker, I reserve the balance of my time.
{time} 1230
Mr. KILDEE. Madam Speaker, I yield myself such time as I may consume.
Madam Speaker, I believe that speedy enactment of H.R. 2535 is
necessary for one reason, to help students, and to my mind no other
reason need be offered.
Suspension of the Direct Loan Consolidation Program initially left
more than 84,000 students without the ability to consolidate their
student loans. These are not simply numbers, they are real people who
suddenly faced additional costs and difficulties in paying off their
student loans. This crisis is something they should not have had to
endure.
While I believe the Department must bear the responsibility for
suspension of this program, I applaud the progress it has made in
approving the consolidation for almost 22,000 students since the
program was suspended. I remain deeply concerned, however, that almost
34,000 students have withdrawn or have had their consolidation
applications deactivated, and that another 30,000 students will
continue to await approval of their applications.
I have been informed that the Department expects to renew operation
of its Loan Consolidation Program by December 1 of this year, and I am
very hopeful that they will reach that target. I would caution
officials at the Department, however, to prepare for a potential
avalanche of new consolidation applications that has been building in
the period since the current program suspended operation in August. We
cannot afford another crisis for our students.
I believe that broadening loan consolidation in the Federal Family
Education Loan Program provides more choices for students to
consolidate their outstanding student loans. I am especially encouraged
that this will be done, to the extent possible, on terms that are the
same as those now provided in the Direct Loan Consolidation Program.
Especially important is the provision in this legislation that will
enable students participating in loan consolidation in the FFEL program
to receive a lower interest rate on the consolidated loans than they
now enjoy.
The other important provision of H.R. 2535 involves an amendment that
I offered on behalf of the gentleman from Missouri [Mr. Clay] and
myself, and which was unanimously accepted during full committee
consideration of this bill. It would make sure that the receipt of a
HOPE scholarship would not count against a student's eligibility for
other Federal student aid.
When we enacted the HOPE scholarship program as part of the tax bill,
we intended to make sure that the receipt of a HOPE scholarship would
not adversely affect a student's eligibility for a Pell grant and other
student aid. Financially needy students need all the help they can get
if they are to pay for a college education, and pitting a HOPE
scholarship against a Pell grant or other student aid was certainly
something we never intended.
In order to avoid this situation, changes in the need analysis
provisions of the Higher Education Act are necessary. Without this
amendment, some 69,000 students will annually lose an estimated $125
million in Federal student aid.
I would also point out that this provision is very time sensitive.
While changes in the new tax law regarding the HOPE scholarship will
not take place until 1999, my understanding is that this change is
already included in the CBO baseline for the Pell Grant Program.
Failure to make the changes included in this legislation will result in
the removal of those assumptions from the baseline. Restoring them at
any time other than the current calendar year will, as I understand it,
result in the cost of at least $120 million a year.
Madam Speaker, this legislation is worthy of strong bipartisan
support, the same support it had in committee. The need for its
enactment is immediate, and I urge my colleagues to join me in
supporting its passage.
Madam Speaker, I reserve the balance of my time.
Mr. McKEON. Madam Speaker, I yield 4 minutes to the gentleman from
Pennsylvania [Mr. Goodling], the chairman of the Committee on Education
and the Workforce.
(Mr. GOODLING asked and was given permission to revise and extend his
remarks.)
Mr. GOODLING. Madam Speaker, this would be a good time to say I told
you so, if it were not for the fact that probably 100,000 students and
former students are dangling in the wind. But I have repeated, since
1991 or earlier, what my predecessor, Chairman Ford, would say over and
over again, ``There is no way under the sun that the Department of
Education can become the effective largest bank in the world.'' But I
learned something. If one wants to get a program named after oneself,
make sure it does not work, and then one will succeed.
At any rate, we have a problem. Leo created it. He was the lion and
he wanted to make very sure that the private sector would be put out of
business as far as student loans were concerned, and he did everything
under the Sun to make sure that that would happen, that only direct
lending would be allowed. And some of the things he did, of course, was
say, well, we will give reduced interest rates, we will give subsidized
deferments, knowing that the private sector could not do that. And of
course that brought all these wonderful applicants to consolidate loans
at these good offers that Leo the lion was making.
And of course all of a sudden they discovered, well, now we are
84,000 behind, so we will just shut down the operation and let the rest
of the students wonder what is going to happen.
Now of the 84,000, we understand there has been some reduction in the
number, but most of it has been done because they just gave up and
dropped out or others the Department decided just not to consider. So
we have a serious problem, and it is the students we are interested in,
the former students, not what will work or will not work.
So I am happy to be here today to say that in a bipartisan way we
have done the right thing in the name of honoring those students who
were tricked into what appeared to be what the Government so many times
promises, something wonderful for nothing that never happens.
Today we can take a bipartisan step with an overwhelming vote and we
can help all of those students and maybe send a message to the
Department, to the departed lion, Leo, that we told him so. We knew he
could not do it. Did not matter which administration, he never did very
well managing anything, and, obviously, he could not become the biggest
bank in the world.
So let us pass it unanimously, help the students.
Mr. CLAY. Madam Speaker, will the gentleman yield?
Mr. GOODLING. I yield to the gentleman from Missouri.
Mr. CLAY. Madam Speaker, the gentleman is speaking about
bipartisanism and he has had a frontal attack on the former chairman of
this committee, Bill Ford, who has had an outstanding record of
supporting education in this committee, and I do not know how the
gentleman can stand there----
Mr. GOODLING. Madam Speaker, reclaiming my time, I did not attack
Bill Ford at all. Bill Ford and I are very good friends.
Mr. CLAY: It sounds like the gentleman and Mr. Ford are very good
friends.
Mr. GOODLING. I merely repeated what Bill Ford said time and time
[[Page H8848]]
again, when the gentleman from Wisconsin [Mr. Petri] would try to move
direct lending. It was the gentleman from Wisconsin who was moving it,
and Bill Ford would say over and other again that is a silly idea, that
is a crazy idea, that cannot work, the Department is not capable of
doing that. And, of course, I have just repeated what he said over and
over again.
Mr. KILDEE. Madam Speaker, I yield 2 minutes to the gentleman from
Missouri [Mr. Clay], the ranking Democratic member of the full
committee.
Mr. CLAY. Madam Speaker, I thank the gentleman for yielding me this
time.
Madam Speaker, I am supporting the bill before us today because, on
balance, it provides some students an additional option to consolidate
their loans. While this serious problem with loan consolidation cannot
be minimized, I am pleased to hear that the Department of Education is
making good progress in eliminating the backlog of loan consolidation
applications. I believe Secretary Riley has a strong commitment to
eliminate this backlog and to prevent future problems.
Madam Speaker, I remain confident about the quality of service direct
lending provides in originating student loans, and there continues to
be substantial support in the use of direct lending in the education
community. It is indisputable that by providing competition, direct
lending has brought great improvement to the whole student loan
program.
Finally, Madam Speaker, I am pleased that this bill includes an
amendment I offered, along with the gentleman from Michigan [Mr.
Kildee], that will ensure that students who receive HOPE scholarship
credits will not have their Pell grants or other student aid reduced.
Without this amendment, some 69,000 students would lose an estimated
$125 million annually.
Madam Speaker, I recommend that the Members of this House support
this bill.
Mr. McKEON. Madam Speaker, I yield 2 minutes to the gentleman from
Ohio [Mr. Boehner], the chairman of our Republican conference, a member
from this committee, who is on leave of absence with the leadership.
Mr. BOEHNER. Madam Speaker, we have spent the past several years
knocking down the status quo barriers to our children's future, but
nowhere is the status quo still more evident than in the Federal
education establishment, a bureaucracy built on empty promises to our
young people.
Not long ago an Education Department official bragged that the direct
loan program, and I will quote, ``provides a simpler, more automated,
and more accountable system,'' to its student customers. But last month
American students learned the harsh truth: That the Government cannot
handle the job.
If you're looking for proof that the education bureaucracy
hurts our kids' future, the consolidation meltdown offers
some good examples--84,000 examples, to be exact. That's the
number of students left in the lurch while the education
bureaucracy tries to get its act together. That's the number
of students being told to put their financial futures on hold
until their government figures out how to deliver its
promises.
The Education Department has made students an offer that sounds too
good to be true, and it is. The truth is, for students hoping to
consolidate their direct loans, their government has sold them a lemon.
For many who grew up in the era of big Government, it is just the
latest empty promise from Washington.
I have two daughters, a 19-year-old and a 17-year-old. People have
labeled that generation Generation X, implying that they are
disillusioned or unsure of who or what they can believe in. Madam
Speaker, if this is the way their government treats their hopes for the
future, who can blame them for being disillusioned?
Today, the House will take action to help give students caught up in
this bureaucratic nightmare a way out by allowing the consolidation of
the direct loans to occur through private lenders. The hard work of my
colleagues on the committee, the gentleman from Pennsylvania [Mr.
Goodling], the gentleman from California [Mr. McKeon], certainly the
gentleman from Michigan [Mr. Kildee], and the gentleman from Missouri
[Mr. Clay] should be commended. I urge all my colleagues to vote for
this bill today.
Mr. KILDEE. Madam Speaker, I yield 1 minute to the gentleman from
North Dakota [Mr. Pomeroy].
Mr. POMEROY. Madam Speaker, I thank the gentleman for yielding me
this time.
To my thinking, this bill addresses a crisis and also addresses over
1 year an inequality which needs to be addressed.
The crisis is the Federal Government's loan consolidation program
offered as part of the Department of Education's Direct Lending effort.
With a backlog of over 80,000 loan consolidation requests, that part of
the system clearly is in crisis. This is simply not fair to the
students, and the bill helps address that.
I am confident that the private lenders of the Guaranteed Student
Loan Program will meet the challenge we give them in this bill. Rather
than delays, backlogs, and shutdowns, students will have the service
they have a right to expect.
As to the fairness issue, I am glad that the private sector will be
allowed a loan consolidation role like the Government's loan program
for the next year. I hope this becomes permanent in future legislation.
If we are to have two student loan programs, one run by the Government
yet one made available through the private sector, let us give them
equal range. Let us give permanently to the private sector this loan
consolidation opportunity.
Mr. McKEON. Madam Speaker, I yield 2 minutes to the gentleman from
South Dakota [Mr. Thune].
Mr. THUNE. Madam Speaker, I thank the gentleman for yielding me this
time.
Madam Speaker, this is an issue with which I have some experience
because it was not all that long ago that my wife and I were in the
process of repaying the loans, the money that we borrowed to finance
our college education.
I believe that this is a very common-sense approach to dealing with
an issue that is so important to ensuring that our young people have an
opportunity to pursue a higher education.
It has already been noted there is a backlog of some 84,000
applications for consolidation. The Department of Education has stopped
accepting any future applications, and that means there are tens of
thousands of students waiting to even submit their application, trying
to seek a way to solve their financial problems and with no other way
to solve them.
{time} 1245
This bill encourages students to do business with the private sector
instead of the Federal Government. I do not think we want people to
depend upon the Government to handle their personal financial matters.
Consolidation will allow students to make lower payments, thus reducing
the number of defaults. In the long run that is going to mean better
credit ratings, which means students will have a better chance to
secure credit in the future, especially when it comes time to apply for
things like a mortgage.
I would encourage all our colleagues, and I am delighted to hear the
bipartisan support for this approach today, to put the private sector
on a level playing field with the Federal Government and to assist the
thousands of students who need to consolidate their loans. In my view,
this is something that is very much win-win. It is very pro student,
pro consumer and user of government programs. It is also something that
is very pro taxpayer in that it gives us a more efficient mechanism
with which to deal with the student loan program. And so I credit those
who have worked on it on both sides of the aisle, and I would encourage
all my colleagues here to support this important move toward better
efficiency in government.
Mr. KILDEE. Madam Speaker, I yield 1 minute to the gentleman from
Pennsylvania [Mr. Klink].
Mr. KLINK. Madam Speaker, I thank the gentleman for yielding me this
time. I thank my former committee colleagues, the two chairmen, for
their kind and great work on this bill. H.R. 2535 is very similar to
section 8 of a bill that I introduced in both this Congress and the
last Congress, this Congress it is H.R. 2140, the Federal
Accountability and Institutional Reform and Education Act, or FAIR Ed
Act, which would make commonsense reforms to the student loan program.
The bill that we are talking about today, H.R. 2535, deserves a
positive
[[Page H8849]]
vote from Members on both sides of the aisle. It is going to provide
students with the ability to consolidate loans either from the Federal
Student Loan Program or the Federal Family Education Loan Program into
a single student loan. This is going to allow students to better manage
their student loan debt and avoid defaults. That is going to be good
for the students, it is going to be good for the schools, and it is
going to be good for the Federal Government.
It is unfortunate under the current circumstances that this has to
come forward as an emergency bill, but this is a great first step in
the process of reauthorizing the Higher Education Act. I urge my
colleagues to vote ``yes.''
Mr. McKEON. Madam Speaker, I reserve the balance of my time.
Mr. KILDEE. Madam Speaker, I yield 2 minutes to the gentleman from
Tennessee [Mr. Gordon], who has worked very hard on this whole question
of loans.
Mr. GORDON. Madam Speaker, I thank the gentleman from Michigan [Mr.
Kildee] for allowing me the opportunity to express my strong support
for H.R. 2535, the Emergency Student Loan Consolidation Act. I want to
begin by commending the gentleman from Pennsylvania [Mr. Goodling], the
gentleman from California [Mr. McKeon], the gentleman from Missouri
[Mr. Clay] and the gentleman from Michigan [Mr. Kildee] for their
leadership on this issue.
When talking about student financial assistance, more specifically
about student loans, there is one thing that we as Members of Congress
can all agree upon. We want what is in the best interests of students
by making available the means to pay for higher education. Each year
that goes by, the cost of higher education climbs more and more, as
does student debt. A major component for students as they graduate and
enter into repayment of their loans is to consolidate their multiple
loans into one manageable debt that has monthly payments.
Unfortunately, the Federal Government, after providing students with
loans, has failed those same students in need of consolidating their
previous loans into one manageable sum.
These recent graduates are trying to start their lives, start their
families and buy homes. Unfortunately, more than 87,000 students
throughout the country are now having trouble making ends meet,
balancing their checkbooks and getting a mortgage because they cannot
consolidate their student loans. I think it is clear that Congress
needs to take action and correct this problem. This bill will
accomplish two things in regard to loan consolidation. First, it will
allow them to consolidate their loans now. Second, it will level the
playing field between our two distinct loan programs, allowing students
more choices in dealing with their finances.
I would like to once again commend my colleagues and the committee
staff for their hard work and for addressing this issue quickly and in
a timely bipartisan manner.
Mr. KILDEE. Madam Speaker, I yield myself such time as I may consume.
I believe it is very important that we recognize the staff for their
good, hard work that they put into this legislation. In particular, I
want to thank Mr. David Evans, Mr. Mark Zuckerman, Ms. Sally Stroup,
Mr. George Conant and Mr. Jeff Andrade for their efforts. Their work
has been very, very helpful. They work back and forth between the
chairman and I, and we certainly appreciate their efforts.
Mr. CUNNINGHAM. Mr. Speaker, I rise in strong support of H.R. 2535,
the Emergency Student Loan Consolidation Act.
Millions of American college students and graduates depend on the
Nation's student financial aid system to work reliably for them.
Unfortunately, the bureaucracy at the U.S. Department of Education is
letting down our students and graduates time and time again. And
Congress must act to remedy the Clinton administration's failure.
The most recent problem is that the U.S. Department of Education's
Direct Lending Consolidation Loan Program has collapsed. In August, it
stopped accepting applications from students and graduates to
consolidate their direct student loans. Loan consolidations allow
students with multiple loans to simplify their finances by combining
their many monthly loan payments into a single loan. Often, students
can consolidate at a preferred rate that lowers their monthly payments.
At the end of August, some 84,000 student borrowers found their
consolidation applications delayed by as much as 10 months. And since
then, when this crisis first broke, the U.S. Department of Education
bureaucracy has made headway on a mere 12,000 consolidation
applications.
In San Diego, this failure is having a significant and negative
impact. We are working very hard to encourage young people to advance
their education in institutions of higher learning. Our local, high
technology economy depends on a growing stream of qualified graduates.
But the failure of the direct lending consolidation system causes
students to question whether their system will work for them. Is it
causing students to reconsider whether they will pursue their college
education? I hope not, but the failure of the U.S. Department of
Education to keep its promises may cause people to make that decision.
This collapse is forcing student borrowers to pay more, and undergo
more hassle, for no good reason, just because the Clinton bureaucracy
failed.
Now, what does this mean in practical terms for American student
borrowers? Students typically participate in several student loan
programs at once, as their education institutions prepare individual
packages of financial aid involving grants and many types of loans.
Simply put, thousands of American students and graduates are in a
credit crunch. They expected consolidations that the Department's
bureaucracy failed to deliver. They are having to make several student
loan payments every month, instead of just one. They are paying higher
rates of interest than they need to. In all the confusion, some
students face damage to their credit ratings, jeopardizing their
ability to buy a home or a car.
All of this has occurred because the bureaucratic U.S. Department of
Education has failed to do its job, again.
One may reasonably ask: Can't students consolidate their loans
elsewhere? The answer is that some can. But in 1993, the Clinton
administration and the Democrat Congress passed a Washington-knows-best
type of law. It requires students that use the Direct Lending Program--
in which student loans are made directly by the U.S. Department of
Education and not by private sources--to use only the U.S. Department
of Education to consolidate their loans. Because educational
institutions, not students, often make the choice in what loan programs
to offer, this choice was not the students; to take. As a result,
students whose schools are direct lending have simply been led off the
edge of a cliff. And that's wrong.
The Clinton administration has failed to adequately remedy this
situation. Congress must act. And we do today, by moving H.R. 2535.
H.R. 2535 simply allows direct lending borrowers to consolidate their
loans using a private sector student loan provider. It was approved on
a unanimous, bipartisan 43-0 vote in committee. And now, it falls to
use in the House to promptly adopt their legislation today.
Mr. Speaker, the Clinton administration's U.S. Department of
Education has time and time again let America's students and our
children down. Its bureaucracy is failing our young people, burdening
our schools with paperwork and needless regulation, and costing us too
much money for too little good.
Let the record show that this Republican Congress will continue to
fight for better education for our young people. We will work to bring
accountability and good management to those programs that are
important, and to eliminate wasteful programs that are failing. We will
fight for the bottom line: better student achievement, better results,
better teacher training, better technology, and less bureaucratic
overhead. We have already made progress in this area by enacting HOPE
scholarships and other incentives for citizens to expand their
education, and by moving my 21st Century Classrooms Act to expand
private investment of technology in our schools.
If we do nothing, our young people and our country will suffer. We
can and will act. We will put our citizens, our students, and our
children first--ahead of big government bureaucracy, ahead of the
status quo special interests, and ahead of partisan political agendas.
The American people demand nothing less. This Emergency Loan
Consolidation Act is just one more step in our long journey forward.
Mr. KILDEE. Madam Speaker, I yield back the balance of my time.
Mr. McKEON. Madam Speaker, I want to second the remarks of the
gentleman from Michigan [Mr. Kildee] in thanking the staff for their
good work, especially on an emergency bill which takes very quick
movement and good cooperation.
Madam Speaker, I have no further requests for time, and I yield back
the balance of my time.
The SPEAKER pro tempore (Mrs. Emerson). The question is on the motion
offered by the gentleman from California [Mr. McKeon] that the House
suspend the rules and pass the bill, H.R. 2535, as amended.
[[Page H8850]]
The question was taken; and (two-thirds having voted in favor
thereof) the rules were suspended and the bill, as amended, was passed.
A motion to reconsider was laid on the table.
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