[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.

                          ____________________