[Congressional Record Volume 148, Number 53 (Thursday, May 2, 2002)]
[Extensions of Remarks]
[Pages E683-E684]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      INTRODUCTION OF LEGISLATION

                                 ______
                                 

                             HON. DAVID WU

                               of oregon

                    in the house of representatives

                         Wednesday, May 1, 2002

  Mr. WU. Mr. Speaker, today I am introducing legislation that would 
renew two important provisions of the Higher Education Act, which are 
set to expire on September 30, 2002.
  The first expiring provision, Section 428G(a)(3), allows schools with 
cohort default rates below 10 percent to disburse a loan in a single 
installment for any period of enrollment that is not more than 1 
semester, 1 trimester, 1 quarter, or 4 months.
  The second expiring provision, Section 428G(b)(1), allows schools 
with cohort default rates below 10 percent to waive the requirement 
that first-year, first-time borrowers loan proceeds be withheld for 30 
days.
  Each provision was part of the 1998 HEA reauthorization law (H.R. 6). 
The decision to sunset both provisions was due to a combination of PAY-
GO budget pressures and a wish by the HEA reauthorization conferees to 
revisit each provision's efficacy in reducing regulatory burden while 
maintaining the integrity of the federal loan programs.
  These goals have been met. Not only has regulatory burden been 
reduced, but costs also have been reduced for schools and lenders.
  Further, there is no evidence that adoption of these provisions has 
caused any increase in default rates at participating schools or 
increased costs to the government. In light of the reality that both 
provisions benefit students and do not increase loan defaults, it is 
important that we extend both provisions permanently.
  Expiration of these beneficial provisions not only will place 
unnecessary administrative burdens on schools, but also will 
disadvantage students. The first provision allows schools the 
flexibility, especially in the case of students attending summer 
sessions and graduating mid-year seniors, to disburse the proceeds of 
their loan in a single payment, and is just a commonsense 
administrative decision.
  The second provision allows school to disburse a loan to their first 
year students so that they may have access to their funds to purchase 
books and supplies, pay housing costs, and other associated educational 
expenses. Without extension of this provision, many students, due to 
their inability to purchase textbooks and acquire housing for 30 days, 
fall behind in their studies and may dropout. This process may 
paradoxically drive up default rates.
  Additionally, failure to renew these provisions would cause 
administrative disruption for schools. Schools would need to revise 
policies and procedures, counseling activities and student disclosure 
and related materials, and reprogram computer systems. These activities 
would need to be completed prior to the beginning of the award year on 
July 1st. Consequently, legislative action should be completed as soon 
as possible but no later than June 1, 2002.

[[Page E684]]

  Failure to renew these provisions would lead to unnecessary 
disruption of financial aid office activities and significant costs to 
revise system operations. A similar administrative disruption and costs 
would be visited upon lending institutions.
  A college education is becoming increasingly more expensive. These 
two important provisions make it easier on the student to receive 
financial aid in a timely manner. Not only is it important that we 
maximize federal assistance in student financial aid, but we must 
ensure that the process is not overly burdensome on students or 
schools.
  Renewing these provisions would not only make the daunting task of 
finding financial aid easier for students. And the cost to the federal 
government would be minimal.
  I urge my colleagues to join with me in renewing HEA Sections 
428G(a)(3) & (B)(1) so we can continue benefiting students and avoid 
disrupting financial aid operations.

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