[Congressional Record Volume 144, Number 56 (Thursday, May 7, 1998)]
[Extensions of Remarks]
[Page E798]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  HIGHER EDUCATION AMENDMENTS OF 1998

                                 ______
                                 

                               speech of

                         HON. ROBERT T. MATSUI

                             of california

                    in the house of representatives

                         Thursday, May 7, 1998

       The House in Committee of the Whole House on the State of 
     the Union had under consideration the bill (H.R. 6) to extend 
     the authorization of programs under the Higher Education Act 
     of 1965, and for other purposes:

  Mr. MATSUI. Mr. Chairman, I rise today in strong support of the 
student loan interest rate compromise that was passed last night as 
part of H.R. 6, the Higher Education Amendments. This bill, with strong 
bipartisan support, offers a sensible solution to the pressing problem 
of the interest rate change scheduled for July 1, 1998.
  There has been a lot of discussion regarding the appropriate interest 
rate for student loans. The Department of Education insists that 
lenders can absorb much larger yield cuts to student loan interest 
rates without any disruption to the student loan program. Yet they are 
actively seeking to arrange more than $5 billion in emergency funding 
in case they are mistaken. Banks and other student lenders vehemently 
disagree. They have consistently argued that a 0.3 percent reduction in 
guaranteed loan yields will drive away many lenders, especially small 
community banks. They also argue that remaining lenders will be 
discouraged from making loans to high risk borrowers, such as those 
attending community colleges and trade schools. Yet so far no lender 
has announced its withdrawal from the loan program.
  Suffice it to say, we simply do not know what the impact of the yield 
cut will be on the guaranteed student loan market. What we do know is 
that we cannot afford to allow our student loan program to collapse 
because of this dispute. No one wants to run the risk that any student 
in their home district will be unable to get their student loans this 
Fall. But we must act now because the beginning of the Fall award cycle 
is less than 60 days away. The compromise reached in H.R. 6 corrects 
the interest rate calculation and ensures that student loans remain 
available for all students.
  For this reason, I find the Administration's veto threat over this 
interest rate compromise to be somewhat disconcerting. Two years ago, 
this Congress called for a bipartisan solution to the direct versus 
guaranteed student loan debate. In the spirit of that decision, we 
voted overwhelmingly last night in support of this carefully crafted 
compromise. I urge the Administration to recognize this bipartisan 
effort and support the interest rate compromise so that we may ensure 
that no students find their access to financial aid unnecessarily 
denied.

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