[Congressional Record Volume 147, Number 174 (Friday, December 14, 2001)]
[Senate]
[Pages S13310-S13311]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
HIGHER EDUCATION ACT OF 1965 AMENDMENTS
Mr. DASCHLE. Mr. President, I ask unanimous consent that the Senate
proceed to the immediate consideration of Calendar No. 277, S. 1762.
The PRESIDING OFFICER. The clerk will report the bill by title.
The legislative clerk read as follows:
A bill (S. 1762) to amend the Higher Education Act of 1965
to establish fixed interest rates for student and parent
borrowers, to extend current law with respect to special
allowances for lenders, and for other purposes.
There being no objection, the Senate proceeded to consider the bill.
Mr. DASCHLE. Mr. President, I ask unanimous consent that the bill be
read a third time and passed, the motion to reconsider be laid upon the
table, and that any statements related thereto be printed in the
Record.
The PRESIDING OFFICER. Without objection, it is so ordered.
The bill (S. 1762) was read the third time and passed as follows:
S. 1762
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. INTEREST RATE PROVISIONS.
(a) FFEL Fixed Interest Rates.--
(1) Amendment.--Section 427A of the Higher Education Act of
1965 (20 U.S.C. 1077a) is amended--
(A) by redesignating subsections (l) and (m) as subsections
(m) and (n), respectively; and
(B) by inserting after subsection (k) the following new
subsection:
``(l) Interest Rates for New Loans on or After July 1,
2006.--
``(1) In general.--Notwithstanding subsection (h), with
respect to any loan made, insured, or guaranteed under this
part (other than a loan made pursuant to section 428B or
428C) for which the first disbursement is made on or after
July 1, 2006, the applicable rate of interest shall be 6.8
percent on the unpaid principal balance of the loan.
``(2) PLUS loans.--Notwithstanding subsection (h), with
respect to any loan under section 428B for which the first
disbursement is made on or after July 1, 2006, the applicable
rate of interest shall be 7.9 percent on the unpaid principal
balance of the loan.
``(3) Consolidation loans.--With respect to any
consolidation loan under section 428C for which the
application is received by an eligible lender on or after
July 1, 2006, the applicable rate of interest shall be at an
annual rate on the unpaid principal balance of the loan that
is equal to the lesser of--
``(A) the weighted average of the interest rates on the
loans consolidated, rounded to the nearest higher one-eighth
of 1 percent; or
``(B) 8.25 percent.''.
(2) Conforming amendment.--Section 428C(c)(1)(A) of such
Act (20 U.S.C. 1078-3(c)(1)(A)) is amended to read as
follows:
``(1) Interest rate.--(A) Notwithstanding subparagraphs (B)
and (C), with respect to any loan made under this section for
which the application is received by an eligible lender--
``(i) on or after October 1, 1998, and before July 1, 2006,
the applicable interest rate shall be determined under
section 427A(k)(4); or
``(ii) on or after July 1, 2006, the applicable interest
rate shall be determined under section 427A(l)(3).''.
(b) Direct Loans Fixed Interest Rates.--
(1) Technical correction.--Paragraph (6) of section 455(b)
of the Higher Education Act of 1965 (20 U.S.C. 1087e(b)), as
redesignated by section 8301(c)(1) of the Transportation
Equity Act for the 21st Century (Public Law 105-178; 112
Stat. 498) is redesignated as paragraph (9) and is
transferred to follow paragraph (7) of section 455(b) of the
Higher Education Act of 1965.
(2) Amendments.--Section 455(b) of the Higher Education Act
of 1965 (20 U.S.C. 1087e(b)) is amended--
(A) by redesignating paragraph (7) as paragraph (8); and
(B) by inserting after paragraph (6) the following new
paragraph:
``(7) Interest rate provision for new loans on or after
july 1, 2006.--
``(A) Rates for fdsl and fdusl.--Notwithstanding the
preceding paragraphs of this subsection, for Federal Direct
Stafford Loans and Federal Direct Unsubsidized Stafford Loans
for which the first disbursement is made on or after July 1,
2006, the applicable rate of interest shall be 6.8 percent
on the unpaid principal balance of the loan.
``(B) PLUS loans.--Notwithstanding the preceding paragraphs
of this subsection, with respect to any Federal Direct PLUS
loan for which the first disbursement is made on or after
July 1, 2006, the applicable rate of interest shall be 7.9
percent on the unpaid principal balance of the loan.
``(C) Consolidation loans.--Notwithstanding the preceding
paragraphs of this subsection, any Federal Direct
Consolidation loan for which the application is received on
or after July 1, 2006, shall bear interest at an annual rate
on the unpaid principal balance of the loan that is equal to
the lesser of--
``(i) the weighted average of the interest rates on the
loans consolidated, rounded to
[[Page S13311]]
the nearest higher one-eighth of one percent; or
``(ii) 8.25 percent.''.
(c) Extension of Current Interest Rate Provisions for Three
Years.--Sections 427A(k) and 455(b)(6) of the Higher
Education Act of 1965 (20 U.S.C. 1077a(k), 1087e(b)(6)) are
each amended--
(1) by striking ``2003'' in the heading and inserting
``2006''; and
(2) by striking ``July 1, 2003,'' each place it appears and
inserting ``July 1, 2006,''.
SEC. 2. EXTENSION OF SPECIAL ALLOWANCE PROVISION.
Section 438(b)(2)(I) of the Higher Education Act of 1965
(20 U.S.C. 1087-1(b)(2)(I)) is amended--
(1) by striking ``, and before july 1, 2003'' in the
heading;
(2) by striking ``and before July 1, 2003,'' each place it
appears, other than in clauses (ii) and (v);
(3) by striking clause (ii) and inserting the following:
``(ii) In school and grace period.--In the case of any
loan--
``(I) for which the first disbursement is made on or after
January 1, 2000, and before July 1, 2006, and for which the
applicable rate of interest is described in section
427A(k)(2); or
``(II) for which the first disbursement is made on or after
July 1, 2006, and for which the applicable rate of interest
is described in section 427A(l)(1), but only with respect to
(aa) periods prior to the beginning of the repayment period
of the loan; or (bb) during the periods in which principal
need not be paid (whether or not such principal is in fact
paid) by reason of a provision described in section
427(a)(2)(C) or 428(b)(1)(M);
clause (i)(III) of this subparagraph shall be applied by
substituting `1.74 percent' for `2.34 percent'.'';
(4) in clause (iii), by inserting ``or (l)(2)'' after
``427A(k)(3)'';
(5) in clause (iv), by inserting ``or (l)(3)'' after
``427A(k)(4)'';
(6) in clause (v)--
(A) in the heading, by inserting ``before july 1, 2006''
after ``plus loans''; and
(B) by striking ``July 1, 2003,'' and inserting ``July 1,
2006,'';
(7) in clause (vi)--
(A) by inserting ``or (l)(3)'' after ``427A(k)(4)'' the
first place it appears; and
(B) by inserting ``or (l)(3), whichever is applicable''
after ``427A(k)(4)'' the second place it appears; and
(8) by adding at the end the following new clause:
``(vii) Limitation on special allowances for plus loans on
or after july 1, 2006.--In the case of PLUS loans made under
section 428B and first disbursed on or after July 1, 2006,
for which the interest rate is determined under section
427A(l)(2), a special allowance shall not be paid for such
loan during any 12-month period beginning on July 1 and
ending on June 30 unless--
``(I) the average of the bond equivalent rates of the
quotes of the 3-month commercial paper (financial), as
published by the Board of Governors of the Federal Reserve
System in Publication H-15 (or its successor), for the last
calendar week ending on or before such July 1; plus
``(II) 2.64 percent,
exceeds 9.0 percent.''.
Mr. JOHNSON. Mr. President, today the Senate passed S. 1762, a bill I
introduced to improve the formula for student loan interest rates and
to ensure the long-term viability of the student loan program. I am
pleased the Senate unanimously agreed to this important legislation and
I am proud to have worked with both students and lenders and my
colleagues on the Health, Education, Labor, and Pensions Committee,
especially Chairman Kennedy and Ranking Member Gregg, as well as
Majority Leader Daschle, in passing this monumental legislation.
All across America, millions of young people are preparing to apply
to college. These teenagers are dreaming not only of the college
experience they are about to embark upon, but also of graduating to
become teachers, doctors, engineers, and even public servants. Thanks
to the national education loan program, the educational and career
aspirations of students and their families can become reality.
We know that the future of our Nation lies in educating the next
generation of young people so that each of them can realize the promise
of America. For 35 years, we have invested in our future by opening the
doors of colleges and universities to the broadest cross-section of our
citizens at the lowest possible cost. That is why passing this
legislation was crucial to ensure that education loans are available to
help future generations of students, workers, and their families climb
the ladder of economic opportunity.
Since 1965, a partnership of students, workers, their families,
educational institutions, lenders, and the Federal Government has
opened the doors of educational opportunity for more than 50 million
Americans. By any measure, the education loan program is a winning
investment for our Nation.
Education loans are good investments in our economy and in our
citizens. As I travel across South Dakota, educators, employers, and
students tell me how valuable a college degree is in today's economy.
Indeed, we know that graduates with college degrees earn an average of
80 percent more than individuals with only a high school diploma. Over
a lifetime, the earnings difference between individuals with high
school and college degrees can be more than $1 million. At a time when
many workers are losing their jobs through no fault of their own,
education loans are critical tools that can empower these workers to
upgrade their skills. As we search for ways to expand our economic
prosperity, we must preserve this important investment in the future of
our Nation.
Congress has now taken the initiative to ensure that future
generations have access to the college or university of their choice by
enacting a permanent solution to the interest rate issue. Again, I
thank my colleagues on both sides of the aisle for their support in
passing this critically important legislation of which we can all be
proud.
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