[Congressional Record Volume 150, Number 125 (Wednesday, October 6, 2004)]
[House]
[Pages H8319-H8326]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
TAXPAYER-TEACHER PROTECTION ACT OF 2004
Mr. BOEHNER. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 5186) to reduce certain special allowance payments and
provide additional teacher loan forgiveness on Federal student loans,
as amended.
The Clerk read as follows:
H.R. 5186
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Taxpayer-Teacher Protection
Act of 2004''.
SEC. 2. REDUCTION OF SPECIAL ALLOWANCE PAYMENTS FOR LOANS
FROM THE PROCEEDS OF TAX EXEMPT ISSUES.
Section 438(b)(2)(B) (20 U.S.C. 1087-1(b)(2)(B)) is
amended--
(1) in clause (i), by striking ``this division'' and
inserting ``this clause'';
(2) in clause (ii), by striking ``division (i) of this
subparagraph'' and inserting ``clause (i) of this
subparagraph'';
(3) in clause (iv), by inserting ``or refunded after
September 30, 2004, and before January 1, 2006,'' after
``October 1, 1993,''; and
(4) by adding at the end the following new clause:
``(v) Notwithstanding clauses (i) and (ii), the quarterly
rate of the special allowance shall be the rate determined
under subparagraph (A), (E), (F), (G), (H), or (I) of this
paragraph, or paragraph (4), as the case may be, for a holder
of loans that--
``(I) were made or purchased with funds--
``(aa) obtained from the issuance of obligations the income
from which is excluded from gross income under the Internal
Revenue Code of 1986 and which obligations were originally
issued before October 1, 1993; or
``(bb) obtained from collections or default reimbursements
on, or interest or other income pertaining to, eligible loans
made or purchased with funds described in division (aa), or
from income on the investment of such funds; and
``(II) are--
``(aa) financed by such an obligation that, after September
30, 2004, and before January 1, 2006, has matured or been
retired or defeased;
``(bb) refinanced after September 30, 2004, and before
January 1, 2006, with funds obtained from a source other than
funds described in subclause (I) of this clause; or
``(cc) sold or transferred to any other holder after
September 30, 2004, and before January 1, 2006.''.
SEC. 3. LOAN FORGIVENESS FOR TEACHERS.
(a) Implementing Highly Qualified Teacher Requirements.--
(1) Amendments.--
(A) FFEL loans.--Section 428J(b)(1) of the Higher Education
Act of 1965 (20 U.S.C. 1078-10(b)(1)) is amended--
(i) in subparagraph (A), by inserting ``and'' after the
semicolon; and
(ii) by striking subparagraphs (B) and (C) and inserting
the following:
``(B) if employed as an elementary school or secondary
school teacher, is highly qualified as defined in section
9101 of the Elementary Secondary Education Act of 1965;
and''.
(B) Direct loans.--Section 460(b)(1)(A) of such Act (20
U.S.C. 1087j(b)(1)(A)) is amended--
(i) in clause (i), by inserting ``and'' after the
semicolon; and
(ii) by striking clauses (ii) and (iii) and inserting the
following:
``(ii) if employed as an elementary school or secondary
school teacher, is highly qualified as defined in section
9101 of the Elementary and Secondary Education Act of 1965;
and''.
(2) Transition rule.--
(A) Rule.--The amendments made by paragraph (1) of this
subsection to sections 428J(b)(1) and 460(b)(1)(A) of the
Higher Education Act of 1965 shall not be applied to
disqualify any individual who, before the date of enactment
of this Act, commenced service that met and continues to meet
the requirements of such sections as such sections were in
effect on the day before the date of enactment of this Act.
(B) Rule not applicable to increased qualified loan
amounts.--Subparagraph (A) of this paragraph shall not apply
for purposes of obtaining increased qualified loan amounts
under sections 428J(c)(3) and 460(c)(3) of the Higher
Education Act of 1965 as added by subsection (b) of this
section.
(b) Additional Amounts Eligible To Be Repaid.--
(1) FFEL loans.--Section 428J(c) of the Higher Education
Act of 1965 (20 U.S.C. 1078-10(c)) is amended by adding at
the end the following:
``(3) Additional amounts for teachers in mathematics,
science, or special education.--Notwithstanding the amount
specified in paragraph (1), the aggregate amount that the
Secretary shall repay under this section shall be not more
than $17,500 in the case of--
``(A) a secondary school teacher--
``(i) who meets the requirements of subsection (b); and
``(ii) whose qualifying employment for purposes of such
subsection is teaching mathematics or science on a full-time
basis; and
``(B) an elementary school or secondary school teacher--
``(i) who meets the requirements of subsection (b);
``(ii) whose qualifying employment for purposes of such
subsection is as a special education teacher whose primary
responsibility is to provide special education to children
with disabilities (as those terms are defined in section 602
of the Individuals with Disabilities Education Act); and
``(iii) who, as certified by the chief administrative
officer of the public or non-profit private elementary school
or secondary school in which the borrower is employed, is
teaching children with disabilities that correspond with the
borrower's special education training and has demonstrated
knowledge and teaching skills in the content areas
[[Page H8320]]
of the elementary school or secondary school curriculum that
the borrower is teaching.''.
(2) Direct loans.--Section 460(c) of the Higher Education
Act of 1965 (20 U.S.C. 1087j(c)) is amended by adding at the
end the following:
``(3) Additional amounts for teachers in mathematics,
science, or special education.--Notwithstanding the amount
specified in paragraph (1), the aggregate amount that the
Secretary shall cancel under this section shall be not more
than $17,500 in the case of--
``(A) a secondary school teacher--
``(i) who meets the requirements of subsection (b)(1); and
``(ii) whose qualifying employment for purposes of such
subsection is teaching mathematics or science on a full-time
basis; and
``(B) an elementary school or secondary school teacher--
``(i) who meets the requirements of subsection (b)(1);
``(ii) whose qualifying employment for purposes of such
subsection is as a special education teacher whose primary
responsibility is to provide special education to children
with disabilities (as those terms are defined in section 602
of the Individuals with Disabilities Education Act); and
``(iii) who, as certified by the chief administrative
officer of the public or non-profit private elementary school
or secondary school in which the borrower is employed, is
teaching children with disabilities that correspond with the
borrower's special education training and has demonstrated
knowledge and teaching skills in the content areas of the
elementary school or secondary school curriculum that the
borrower is teaching.''.
(3) Effective date.--The amendments made by this subsection
shall apply only with respect to eligible individuals who are
new borrowers (as such term is defined in 103 of the Higher
Education Act of 1965 (20 U.S.C. 1003)) on or after October
1, 1998, and before October 1, 2005.
(c) Information on Benefits to Rural School Districts.--The
Secretary shall--
(1) notify local educational agencies eligible to
participate in the Small Rural Achievement Program authorized
under subpart 1 of part B of title VI of the Elementary and
Secondary Education Act of 1965 of the benefits available
under the amendments made by this section; and
(2) encourage such agencies to notify their teachers of
such benefits.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Ohio (Mr. Boehner) and the gentleman from California (Mr. George
Miller) each will control 20 minutes.
The Chair recognizes the gentleman from Ohio (Mr. Boehner).
General Leave
Mr. BOEHNER. Mr. Speaker, I ask unanimous consent that all Members
may have 5 legislative days within which to revise and extend their
remarks and include extraneous material on H.R. 5186.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Ohio?
There was no objection.
Mr. BOEHNER. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, today the House has an opportunity to pass a bill that
will protect taxpayers, support school teachers and help poor schools
ensure every student has the opportunity to learn from a qualified
teacher.
I want to particularly thank my colleague, the gentleman from
California (Mr. McKeon) and the gentleman from South Carolina (Mr.
Wilson) for the vital roles they have played for bringing this bill to
the floor.
For more than 10 years, a complex Federal policy known as the 9.5
percent ``special allowance'' has resulted in excess taxpayer subsidies
for some student loan providers. This policy was adopted under the
Clinton administration, and while some would call it a loophole, the
loan providers were told by the Clinton administration that it was
perfectly legal and legitimate.
The excess taxpayer subsidies being paid under this policy have in
recent years begun to balloon, and if we fail to act, billions of
dollars in excess taxpayer subsidies will be paid to student loan
providers legally.
Now, this may be technically legal but I think it is unfair to
taxpayers and unfair to students, and it is unfair to the schools,
people who should be the beneficiaries of this funding. When you boil
it down, it is just plain bad policy.
Eight months ago President Bush called on Congress to pass
legislation to shut down these excess taxpayer subsidies. The Bush
administration noted that ending the excess subsidies without
legislation was likely to take at least 2 years. Because of the
precedents established under the previous administration, it would take
the administration 2 years to end the policy without legislation. Two
years is too long to wait.
So the President asked Congress to pass legislation this year that
would allow the 9.5 percent subsidies to be stopped now.
The legislation before us should be a no-brainer. It is called the
Taxpayer-Teacher Protection Act because that is exactly what it will
do. The bill will protect taxpayers by shutting down the excess
subsidies to lenders, as the President has asked, and it will use the
money to help teachers and poor schools across the country.
Rural and urban schools are confronting a shortage of qualified
teachers in key subjects. This shortage is very serious and
particularly hurts schools in our poorest communities.
According to the most recent data available from the National Center
for Education Statistics, 67 percent of our public middle and high
schools have vacancies in special education, 70 percent had vacancies
in mathematics, 61 percent had vacancies in biological or life
sciences. And according to the Committee For Economic Development,
almost a third of high school math classes are taught by teachers who
did not major or even minor in mathematics. For biology it is 45
percent, and in life sciences the percentage rises to 60 percent.
President Bush has repeatedly asked Congress to create new incentives
for good teachers to teach in our poorest schools. The President has
asked that we increase the amount of loan forgiveness that is available
to qualified teachers in these key subjects who agree to teach for at
least 5 years in our poorest schools. The President wants us to
increase loan relief for the teachers from the current maximum of
$5,000 to a new maximum of $17,500, more than triple the amount that is
currently available.
The President asked us to do this after the No Child Left Behind Act
became law. And he asked for it again last week in Springfield, Ohio,
where I was with him at an education event.
Under this bill we will shut down the excess subsidies for now and
use the money to provide loan relief for highly qualified teachers in
high-needs schools, helping our schools deal with the teacher shortage.
The House last year overwhelmingly passed legislation written by the
gentleman from South Carolina (Mr. Wilson) that called for similar
teacher loan relief. Shutting off these excess subsidies now via this
bill will also pave the way for us to devote billions of dollars over
the next several years to college access programs for low- and middle-
income students.
This was the original intent of the bill introduced by the gentleman
from California (Mr. McKeon) and I back in May. And that bill, the
College Access and Opportunity Act, would permanently shut down the
excess subsidies as part of a comprehensive reauthorization of the
Higher Education Act.
We continue to believe a long-term, multiyear reauthorization of the
Higher Education Act is the proper vehicle for ensuring that the 9.5
percent subsidies stay shut down, because it would ensure that billions
of dollars are used to expand college access for low- and middle-income
students.
Let us make no mistake about this. We are closing the loophole, and
once it is closed, it is not coming back. The only question today is
whether Democrats and Republicans can agree on how the money should be
used within the Higher Education Act.
We could not find an agreement on the big question of the
reauthorizing the bill this year, and unfortunately, this looks like
that debate will continue into next year. But in the meantime this bill
gives us the chance to close down the subsidies now and use the money
for something we can all agree is a worthy cause.
Now, there are some who say this bill does not go far enough. They
contend it should shut down subsidies retroactively. Let me say, here
is the problem with that.
Shutting the 9.5 percent subsidies down retroactively will not just
affect the big kids on the block, those in the student loan business
who do it for a profit. It will affect smaller, nonprofit student aid
providers all across America, nonprofit organizations that were told
years ago by the Federal Government that this practice is 100 percent
legal and legitimate. And as we will see
[[Page H8321]]
as this debate goes on, we are talking about nonprofit student aid
organizations from all over the country, whether it be the big student
aid organization in California, where 85 percent of their effort is
aimed at minority children, and Texas, Arizona, all across the country.
Over the past few days Congress has heard an earful from nonprofit
student aid providers warning that retroactive cuts would hurt students
and families that need help paying for college. We have heard from
Chela in California and we have heard from a provider in South Texas.
Half of their loans go to Hispanic students, all needy students.
We have heard from nonprofit providers in New Mexico, Rhode Island,
Oklahoma. ``Cuts in these subsidies, especially retroactive cuts, would
immediately cause a negative impact to Iowa students,'' warned a
nonprofit organization in Iowa.
Now, we need to shut down the subsidies, but we need to make sure
that we are not shutting down nonprofit student aid organizations in
the process. And if we go any further than what we propose in this
bill, I think we are going to hurt the very families and students that
we are actually trying to help.
So I would urge my colleagues to support the measure on the floor
today. It is the right thing to do for our taxpayers, teachers and
American students.
Mr. Speaker, I reserve the balance of my time.
Mr. GEORGE MILLER of California. Mr. Speaker, I yield myself 3
minutes.
Let me say at the outset, that the Members on this side of the aisle
enthusiastically support this legislation brought to the floor by the
chairman of the committee and the chairman of the subcommittee. We only
ask, what has been holding it up? Why were you not here earlier? But
you are here now and we will celebrate the fact that you are here now.
I must say that we were excited when the gentleman from Maryland (Mr.
Van Hollen) and the gentleman from Michigan (Mr. Kildee) were able to
get an amendment this past September onto the floor of the House so we
could get this issue in front of the House, get it out into the
daylight and let the Members work the will of the House, something that
does not happen too often in this Chamber. The will is quite stifled
most of the time.
But when this issue is put before the House by the gentleman from
Maryland (Mr. Van Hollen) and the gentleman from Michigan (Mr. Kildee),
and the House got a chance to look at it, Republicans and Democrats,
conservatives from the North, East, South, West, around the country,
414 to 3, they said, get rid of this loophole. It is unjustified, it is
unconscionable, it is expensive and it is killing the credibility of
this program.
Tonight, we answer that call by the House of Representatives to get
rid of this program. But tragically tonight we only answer a part of
that call because we do not deal with those provisions in this program
that continue these unconscionable profits at the 9.5 percent loans due
to the recycling. We are going to stop this loophole for this year, and
we ought to stop the recycling.
This is not retroactive. But when you do not stop the recycling, the
good purposes for which our colleagues across the aisle are going to
put this money to use, and that is to help those teachers, provide loan
forgiveness for those teachers in difficult districts who are making
the special efforts, some 10,000 additional teachers, who could have
access to loan forgiveness, now will not have access to that loan
forgiveness.
All it would require is to close the loophole. That is what the House
voted on when they voted on the Kildee-Van Hollen amendment. They voted
to close a loophole, not sort of close a loophole, not part way close a
loophole, but close a loophole. Maybe only for 1 year now, and that is
the best we can do under these circumstances, but the entire loophole.
The difference is billions of dollars. The difference is 10,000
teachers in need of loan forgiveness. That is the choice.
I heard this was held up because we had all this power. We would like
to use our power now to tell you and persuade you to join with us and
close the entire loophole and get those other 10,000 teachers that are
eligible. Power to the people, to the Democrats, because apparently
that is why you have not done it now for 2 years. So we want to join
with you. We can have a manager's amendment tonight to close the
loophole like 414 of our colleagues urge.
I want to thank the gentleman from Michigan (Mr. Kildee) and the
gentleman from Maryland (Mr. Van Hollen) for their creativity and
tenacity in getting this before the House of Representatives, getting
it into the full Chamber where the Members on a bipartisan basis have
overwhelmingly repudiated this program. I am sorry we cannot go the
whole way.
Mr. Speaker, I reserve the balance of my time.
Mr. McKEON. Mr. Speaker, I yield myself 4\1/2\ minutes.
Mr. Speaker, the Taxpayer-Teacher Protection Act is a straightforward
plan to shut down excess subsidies for student loan providers and
direct the savings to expanded student loan relief for teachers. There
is a sense of urgency in the bill before us, and I agree that these
reforms should be sent to the President for his signature as soon as
possible. Yet I find it troubling that we are here today when these
reforms could have been enacted months ago, if not for the partisan
foot-dragging on the other side of the aisle.
The fact is, President Bush called on Congress to shut down these
subsidies 8 months ago in his fiscal year 2005 budget request.
Unfortunately, Democrats chose not to address the issue in any of their
Higher Education Act reauthorization plans, and they refused to work
with us to enact our legislation that would have shut down the 9.5
percent floor.
Let us be clear on this point. The reason we are here today is
because those on the other side of the aisle did nothing to shut down
these subsidies in their own legislation and they have stonewalled our
efforts to cut off the subsidies as part of a larger reauthorization
bill.
What is worse, our Democratic colleagues who have finally belatedly
joined us in calling for an end to the excess subsidies are advocating
for changes that would cut student loan benefits.
{time} 2345
This runs counter to the very principle that is driving these
reforms, that Federal student aid should be directed to student
benefits.
The bill before us is the first step to permanently ending the 9.5
percent special allowance subsidy. Make no mistake, by approving this
bill, the Congress will have taken the first step to ensuring a
permanent end to the excess subsidy payments.
We have always maintained that the best solution is to provide a
permanent legislative fix that will direct these resources to student
benefits. We proposed that type of permanent solution earlier this
year, and we will fight for its enactment next year. In the meantime,
this bill is the right answer today.
Prospective changes like those in the bill before us will ensure the
loophole is shut down without jeopardizing student benefits. The GAO
recently recommended Congress put an end to the excess loan provider
benefits with prospective changes. That is because the GAO recognizes
that retroactive changes would harm students by reducing borrower
benefits.
The recipients of the 9.5 percent special allowance subsidy are
largely nonprofit State secondary markets. These organizations are
required to use the proceeds of the 9.5 percent subsidy to provide
student benefits.
Many of the nonprofit State organizations have told us that
retroactive changes would force cuts to programs that forgive loans for
nurses, reduce loan fees and interest rates for students, provide
alternative loans for needy students and families, and help high school
students and families plan for college and find financial aid. These
are just a few of the student benefits that would be cut under the
misguided Democratic plans to make retroactive changes.
We wish our Democratic friends had understood the importance of this
issue sooner so that these reforms would already be enacted. In
February, President Bush called on the Congress to shut down the excess
subsidies. In May, the gentleman from Ohio (Chairman
[[Page H8322]]
Boehner) and I introduced a bill that would do just that. At the same
time, Democratic leaders attacked that proposal and prevented us from
enacting comprehensive reforms that would expand college access, all
the while offering proposals of their own that ignored the excess
subsidy payments. We are pleased that the Democrats have finally come
around, but we wish they had realized the importance of this issue
sooner.
Shutting down these excess subsidies is important, and so is the need
for the expanded loan forgiveness this bill will provide. The
Republican plan to permanently end the excess subsidies for student
loan providers is hinged on the idea that these resources must be used
for student benefits in the Federal student loan program. That is why
the Taxpayer-Teacher Protection Act takes the savings generated by
shutting down excess loan provider profits and targets them to student
loan relief for teachers.
K-12 schools in high poverty areas, including rural and urban
schools, are facing severe shortages of teachers in key subjects. The
House has already approved a similar expansion of student loan relief.
That bill, authorized by the gentleman from South Carolina (Mr. Wilson)
received widespread support among Republicans and Democrats alike, and
I expect similar support today.
President Bush has led efforts to expand loan forgiveness for
teachers of math, science and special education who commit to teaching
at least 5 years in disadvantaged schools. The current loan forgiveness
of $5,000 will be more than tripled, to $17,500, under the bill,
providing a valuable tool for disadvantaged schools seeking to place a
highly qualified teacher in every classroom.
I hope we can all work together now to pass this bill and get it to
the President for his signature.
Mr. Speaker, I reserve the balance of my time.
Mr. GEORGE MILLER of California. Mr. Speaker, I yield 4 minutes to
the gentleman from Michigan (Mr. Kildee), one of the sponsors of the
original amendment to get this in front of the House.
Mr. KILDEE. Mr. Speaker, let me make it clear that the Kildee-Van
Hollen efforts to end this subsidy have never gone after existing
loans. Both the Kildee-Van Hollen amendment and H.R. 5113 affect
prospective loans.
Mr. Speaker, I am going to support this bill today despite some
glaring inadequacies.
H.R. 5186 makes an improvement over current law which has been
providing lenders excessive subsidies, but it also fails to address a
large share of this subsidy and only enacts this change for about 1
year.
The loophole, which this bill only partially closes, has increased
lender profits by nearly $1 billion in fiscal year 2004. Under this
antiquated loophole, lenders presently receive an additional 5.5
percent return, compared to subsidies on regular student loans. That is
free money. Worse, this loophole has reduced resources that should be
used to make college cheaper for students.
The gentleman from Maryland (Mr. Van Hollen) and I became concerned
about this issue in October of last year when we asked the General
Accountability Office to investigate how lenders were exploiting this
loophole. This report produced alarming results including:
The Federal subsidy provided under this loophole has grown nearly
five times from $200 million in fiscal year 2001 to $1 billion in
fiscal year 2004.
The volume of loans carrying this subsidy has grown from $11 billion
in fiscal year 1995 to over $17 billion at the end of the third quarter
in 2004.
Clearly, these facts demand immediate action.
The GAO's report on this matter called for such action by the Bush
administration. Unfortunately, they failed to answer that charge. Due
to this refusal, Congress now has to take steps to deal with this
issue. I am pleased that the gentleman from Ohio (Chairman Boehner) and
the gentleman from California (Mr. McKeon) have now responded to our
calls to close this loophole.
Today's effort is especially timely considering that all committee
Democratic members called for a markup on the gentleman from Maryland's
(Mr. Van Hollen) and my legislation to eliminate this lender loophole.
However, it is important that Members understand that this bill has
two major deficiencies. First of all, it does not completely close the
loophole which lenders have been exploiting. It keeps on ``recycling.''
Cyclists pedal through the Tour de France for handsome profits;
recyclists pedal through the U.S. Treasury for even greater profits.
This is free money and it should be stopped. Under this legislation,
lenders will continue to receive sizeable and excessive subsidies,
perpetuating this taxpayer ripoff.
Second, this bill does not close this loophole permanently. Instead,
it opts for about a 1-year fix. This loophole should be permanently and
completely closed, and the savings should be used to make college
cheaper for needy students.
Failing to completely and permanently close this loophole is a lost
opportunity to create more aid for needy students.
Permanently and completely closing this loophole would enable us to
increase the bill's loan forgiveness provisions even more, or enact
other means to make college more affordable. Students are bearing the
brunt of rising college costs and shrinking aid.
It is unfortunate that we cannot completely and permanently address
this problem and provide more help. I would hope that passage of this
legislation does not end our efforts to fully and permanently close
this loophole.
Mr. BOEHNER. Mr. Speaker, I yield myself such time as I may consume.
I would remind my colleagues that we are less than 4 weeks from a
Presidential election and an election for all of us who serve here in
the House. We all know what happens when we get to the eve of election.
We all find religion.
Now, the President called for the elimination of this 9.5 percent
subsidy back in February. I have been working on this for a year. It
was in the gentleman from California's (Mr. McKeon) and my bill that we
introduced back in May, and my colleagues on the other side want to
criticize us for not acting sooner. Yet, the substitute, or their own
higher education reauthorization, never even addressed this very
subject.
Now, I would say to my colleagues it takes two to tango, and they all
know how things get done around here. We need to work together.
The criticism about this bill not going far enough, I think, is well
understood by Members on both sides of the aisle. While, in fact, it
may shut down some subsidies that go to for-profit lenders, the problem
we have is those lenders in the nonprofit sector who use that money to
aid students and needy students will be burned in the process, and I
think we take a great risk in going down that path today.
That is why the bill that we have before us shuts these things down,
these 9.5 percent loans, for the next year and allows us, in the
reauthorization of the Higher Education Act, to make sure that when we
shut these 9.5 percent loans down permanently, we do so in a way that
we do not hurt the nonprofit community that helped many low-income and
needy students around the country.
Mr. Speaker, I yield 2 minutes to the gentleman from Nevada (Mr.
Porter).
Mr. PORTER. Mr. Speaker, I rise in support of the Taxpayer-Teacher
Protection Act, and I strongly encourage my colleagues on both sides of
the aisle to join me in voting for this common-sense bill.
The reforms before us are straightforward, even simple, but they are
also incredibly important. I was proud to cosponsor this legislation
and look forward to the benefits it provides our teachers.
This bill addresses two pressing issues within the Federal higher
education programs. First, it will shut down excess subsidies being
paid to certain student loan providers. Second, it will direct these
dollars so that we can increase student loan relief for teachers.
In February, President Bush called on Congress to put an end to
excess subsidies paid to certain student loan providers. Republicans
answered the President's call by introducing legislation in May that
would shut this practice down and direct the resources back
[[Page H8323]]
to where they belong, to student benefits within the Higher Education
Act.
This bill will finally allow us to enact that important reform and
will direct the savings to increased loan relief for teachers.
The second piece of this bill will provide critical support for our
Nation's classrooms, and I would like to commend my colleague, the
gentleman from South Carolina (Mr. Wilson), for his leadership in this
area.
The loan relief provider in this bill will increase loan forgiveness
for teachers of math, science and special education who serve in
disadvantaged schools. I know firsthand how rural and urban school
districts are struggling to find highly qualified teachers in these key
subjects, and that is why I am so proud to support this bill. In Clark
County, Nevada, alone, we are required to hire, on average, 2,000 new
teachers a year.
Currently, the Higher Education Act provides loan forgiveness of up
to $5,000 for teachers who teach for at least 5 years in Title I
schools. These schools, which serve larger shares of disadvantaged
students, often struggle to recruit and retain the teachers they need.
Although the current loan forgiveness is valuable, we have discovered
particular shortages in math, science and special education. To help
schools recruit teachers in these high-demand subject areas, we must
target our resources where they are needed most.
I appreciate and urge my colleagues to join me in supporting this
bill.
Mr. GEORGE MILLER of California. Mr. Speaker, I yield 4 minutes to
the gentleman from Maryland (Mr. Van Hollen), who again was the spark
plug for getting this legislation before the full House and getting
this bill to the floor.
Mr. VAN HOLLEN. Mr. Speaker, I want to join with my colleagues, the
gentleman from California (Mr. George Miller) and the gentleman from
Michigan (Mr. Kildee) in thanking the gentleman from Ohio (Chairman
Boehner) and the subcommittee chairmen and the others on that side for
joining us in addressing a problem that we all agree has allowed
lenders to pocket billions of dollars of taxpayer money at the expense
of our students.
The good news is that this bill begins to address the problem. The
bad news is it does not do the job fully or permanently.
As the chairman knows, the gentleman from Michigan (Mr. Kildee), the
gentleman from California (Mr. George Miller) and I introduced an
earlier bill after the passage of the amendment that would close the
9.5 percent loophole permanently, completely, immediately and
prospectively, not retroactively, and would redirect the proceeds, the
savings, to the students that we were intending to benefit all along.
Unfortunately, we have not had an opportunity in committee or on this
floor to deal with that bill that would address the problem fully and
permanently; and when I heard there was going to be a bill introduced
on the other side of the aisle, I thought this is a good thing, it does
not matter who has got their name on it. It does not matter whether it
is Republican leadership or Democratic leadership. The important thing
is to get the job done for the American people.
But when we take a look at the bill, it has two very serious
problems. One is it does not deal with the issue permanently. Why not?
We could do it this year. We could do it now.
Secondly, it does leave a big part of the loophole in place. It would
continue to permit lenders to make new 9.5 percent-eligible loans using
the proceeds from existing 9.5 percent-eligible loans through a scheme
or process called recycling.
Now, the Government Accountability Office has told all of us that
that portion of the loophole accounts for 40 percent of the loss of
taxpayers' dollars, and here is what the GAO says about closing the
loophole, and I quote from their September report:
``Industry experts acknowledge that the government could take action
to eliminate the 9.5 percent yield for loans made or purchased in the
future without compromising the ability of lenders to meet their
obligations with respect to their pre-October 1, 1993, tax exempt
bonds.''
{time} 0000
That is what the Miller-Kildee-Van Hollen legislation does. It shuts
it down prospectively. And as the GAO report says, without government
action, the taxpayers remain exposed to additional special allowance
payments that can easily and rapidly escalate into billions of dollars.
Now, when you close a loophole, my idea is you take care of the
problem all at once. You do not just shut down 60 percent of the hole,
allowing 40 percent to continue to drain taxpayer dollars at the
expense of students. And that is what the other bill does.
If you were talking about just protecting nonprofits, you would have
crafted your bill to deal with just nonprofits. The GAO report makes it
absolutely clear that the great bulk of lenders involved in recycling
are for-profits.
Secondly, if you address the problem the way we do, you will be sure
the students directly benefit from the savings, 100 percent of the
savings, from closing the loophole, not just a portion of the savings
of closing the loophole.
I would remind my friends on the other side of the aisle that the
original purpose of the Higher Education Act was to help America's
students afford college. It was not to provide government-guaranteed
profits to a few lenders and bond investors. We are missing,
unfortunately, a golden opportunity to deal with this once and for all.
Mr. BOEHNER. Mr. Speaker, I reserve the balance of my time.
Mr. GEORGE MILLER of California. Mr. Speaker, how much time do I have
remaining?
The SPEAKER pro tempore (Mr. Mario Diaz-Balart of Florida). The
gentleman from California has 9 minutes remaining.
Mr. GEORGE MILLER of California. Mr. Speaker, I yield 2 minutes to
the gentlewoman from California (Ms. Woolsey).
Ms. WOOLSEY. Mr. Speaker, I rise to discuss H.R. 5186, introduced by
a number of Republican Members to address a billion dollar and growing
windfall subsidy for student loan lenders. Like my Democratic
colleagues, I will support H.R. 5186, because it is certainly better
than current law. But on this issue, that is a pretty low bar.
I believe that families who are struggling to pay college tuition
deserve to know exactly how low my Republican colleagues have set that
bar. Lenders recently have taken increased advantage of a provision in
the Higher Education Act that guarantees them 9.5 percent in returns on
certain loans. That is almost triple the rate of return on most student
loans.
In fiscal year 2004, that meant that $1 billion that could have
helped hardworking Americans pay for college instead went into lenders'
pockets. Democrats have been working to close this loophole for the
last year, but Republicans did virtually nothing until public outrage
reached the boiling point.
Even now, the Republican bill would leave 40 percent of the billion
dollar loophole open. They would rather that $400 million go to the
lender profits than to Pell Grants or low-income students or to the
teacher loan forgiveness that they include in 5186, and we all support.
I do not agree. The Bush administration also has refused to close the
loophole administratively, even though the nonpartisan Government
Accountability Office found the administration has the authority to
absolutely do so.
Democrats have a better response: H.R. 5113. I am proud to be a
cosponsor of H.R. 5113, because it would fully and permanently close
this loophole and put the savings into Pell Grants. That is the kind of
help that hardworking men and women deserve to put themselves and their
children through college so that they can better their lives.
That is the kind of help I wish we were offering here today.
Unfortunately, we are not. But because a half loaf is better than none,
I will support H.R. 5186.
Mr. BOEHNER. Mr. Speaker, I am pleased to yield 2 minutes to the
gentleman from Georgia (Mr. Gingrey), a member of our committee.
Mr. GINGREY. Mr. Speaker, I want to thank the chairman, the gentleman
from Ohio (Mr. Boehner), for bringing H.R. 5186, the Taxpayer Teacher
Protection Act, to the floor this evening.
As a sponsor of H.R. 2211, the Ready to Teach Act, I believe it is
important
[[Page H8324]]
to permanently end excess student loan subsidies and to redirect
savings to expanding loan relief for teachers of key subject areas in
high-poverty, K-12 schools. The Ready to Teach Act was designed to
benefit efforts in recruiting and training the best teachers to fill
much-needed vacancies in subject areas such as math, science, foreign
language and special ed.
Every child deserves an opportunity to achieve a quality education,
and I believe H.R. 5186 will aid these efforts so that every child is
given a chance to succeed to the best of his or her ability. The
Taxpayer Teacher Protection Act redirects the excess loan provider
profits to student loan relief for teachers.
High-poverty schools are struggling to find highly qualified math,
science, and special education teachers. This bill would more than
triple loan forgiveness for teachers of these key subjects who agree to
teach in title I schools for at least 5 years. The expanded loan relief
for math, science, and special education teachers will help States and
schools recruit and retain the teachers they desperately need. This
bill will help schools place a highly qualified teacher in every public
school classroom, as called for by the bipartisan No Child Left Behind
bill.
President Bush called on Congress 8 months ago to shut down the
excess lender earnings received through the 9.5 percent floor. I
support President Bush in his commitment to finding commonsense
solutions to our education problems. Removing the 9.5 percent subsidy
will help our most stressed schools fill vacancies with much-needed
quality instruction, and I ask my colleagues to pass this bill.
Mr. GEORGE MILLER of California. Mr. Speaker, I yield 2 minutes to
the gentleman from Illinois (Mr. Davis), a member of the committee
(Mr. DAVIS of Illinois asked and was given permission to revise and
extend his remarks.)
Mr. DAVIS of Illinois. Mr. Speaker, I rise in support of H.R. 5186,
but I also know that much more needs to be done. I agree with all of
those who suggest and predict that there is a tremendous need to
provide loan forgiveness for math, science and special education
teachers. But there is also a tremendous need to recruit teachers for
disadvantaged communities where it is very difficult to get specialized
teachers to come.
There is also a tremendous need to recruit male teachers for early
childhood in elementary education. Many, many school boys do not see a
male teacher until they reach eighth grade. So many of them grow up
with the idea that education is not for them; that it is a girl-female
thing.
So I support this legislation, but, of course, it falls short of the
mark, and I look forward to the day when we will have a real loan
forgiveness program that provides us with the teachers we need for
America's children.
Mr. GEORGE MILLER of California. Mr. Speaker, I yield 1 minute to the
gentlewoman from Texas (Ms. Jackson-Lee).
Ms. JACKSON-LEE of Texas. Mr. Speaker, I thank the distinguished
gentleman for yielding me this time, and I rise with enthusiasm to
support this legislation and to make comment on the legislation
authored by the gentleman from California, the gentleman from Maryland
(Mr. Van Hollen) and the gentleman from Michigan (Mr. Kildee).
I hope, as we move forward, that we will find our way to telling
America's mothers and fathers and those who support young people going
to college that we permanently have closed the loophole that now earns
nearly $1 billion in excess subsidies from this loophole.
Mr. Speaker, I come to the floor because I have been inundated by
students around the country, and particularly, just Monday, a young man
stood up in a town hall meeting and said he was from LaSalle
University, and he pleaded not for issues dealing with war and peace,
but he said, you know what, there are students in my college dropping
out by the wayside because they cannot afford to pay for college.
In my own hometown in Houston, I am talking to students working at
Burger King and McDonalds because they have no opportunity to go to
college. This is a good start. We need to help our students. I ask
support for this bill, but I hope we will go further.
Mr. Speaker, I am pleased to be here today to support this bill,
which both sides of the Education and the Workforce Committee can agree
upon--despite it having several tragic flaws. Under an antiquated
provision in the Higher Education Act, lenders are guaranteed a 9.5
percent rate of return on student loans originally backed by non-
taxable securities issued before 1993. This rate of return is 6 percent
higher than the return which lenders receive on regular student loans.
In 2004, it is estimated that lenders earned nearly $1 billion in
excess subsidies from this loophole. While this bill is an improvement
over current law, it fails to fully address this problem, as Democratic
proposals have done. This bill doesn't close the loophole allowing a
practice which has created up to 40 percent of the current loans
receiving this wasteful subsidy to continue. The bill continues a
current lender practice typically referred to as ``recycling.''
Recycling involves lenders using the interest payments from student
borrowers and the excessive subsidies paid by the Federal government to
make new loans which also receive a guaranteed 9.5 percent rate of
return. Recycling alone is responsible for 40 percent of the current
loan volume which is guaranteed this 9.5 percent rate of return.
Allowing this practice to continue will allow lenders to collect
hundreds of millions of dollars in profits.
This bill fails to provide a permanent fix to this problem. It
partially closes this loophole for only a year, rather than permanently
ending this abusive practice. This loophole should be permanently and
completely closed and the savings should be used to make college
cheaper for needy students.
This bill fails to even do what President Bush called for in his last
Budget. President Bush called for ending this loophole, yet the
Republicans fail to fully close it.
Republicans only introduced legislation which they actually intended
to move once public outcry on this issue grew. The Republican Higher
Education reauthorization bill has floundered for several months, never
having even been marked up in Committee. As the outcry over this
wasteful subsidy increased, Republicans decided to move last minute
legislation. This contrasts with over a year-long effort by Democratic
Members on this issue.
The Bush Administration has refused to act on this issue. Despite a
recent GAO report calling on the Department of Education to close this
loophole administratively, the Bush Department of Education has refused
to act, claiming they do not have the authority and cannot overcome
bureaucratic hurdles. The GAO report strongly disagrees with this view.
Democratic Members have a better response. H.R. 5113 (introduced by
Representatives Kildee, Van Hollen and George Miller) would permanently
and completely close this wasteful lender subsidy. We should be
focusing now on legislative initiatives that will truly help those
seeking an education, rather than creating more hurdles and obstacles.
Finally, I also support H.R. 5185, which extends the much-needed
Higher Education Act--but only temporarily. This bill also helps
teachers in loan forgiveness. But this is not enough--our students are
losing higher education opportunities because there is no opportunity
and no money. Shame on us!
Mr. GEORGE MILLER of California. Mr. Speaker, I yield 3 minutes to
the gentleman from New Jersey (Mr. Holt).
Mr. HOLT. Mr. Speaker, I thank the ranking member on the Committee on
Education and the Workforce for yielding me this time.
We are talking about education, so maybe we should take a moment for
a textbook example of euphemism, Taxpayer Teacher Protection Act. Now,
one would think this would mean to save the taxpayers money. In fact,
what we are doing is allowing lending institutions to continue to get a
guaranteed exorbitant rate of return and make a killing.
Let me just review what this bill does. I rise in support of H.R.
5186. It is an improvement over current law. But it fails to address
the problem. It ignores the Government Accountability Office's
recommendation to immediately stop lenders from issuing new loans at
9.5 percent. It ignores the GAO's recommendation to close the loophole
permanently.
It allows hundreds of millions of dollars in new loans to be issued
at the bloated rates of 9.5 percent. It denies additional loan
forgiveness to 10,000 teachers working in the Nation's most needy
public schools. It chooses special interests over taxpayers by allowing
the loophole to continue for up to 40 percent of the 9.5 percent loans.
As the outcry around the country over this wasteful subsidy
increased, the Republicans decided to move last-minute, half-baked,
barely adequate
[[Page H8325]]
legislation. It contrasts sharply with the year-long efforts by the
gentleman from Michigan, Maryland, and California, the Kildee-Van
Hollen-Miller bill, H.R. 5113, which would permanently and completely
close this wasteful lender subsidy.
Mr. GEORGE MILLER of California. Mr. Speaker, could you advise the
time remaining?
The SPEAKER pro tempore. The gentleman from California has 3 minutes
remaining.
Mr. GEORGE MILLER of California. Mr. Speaker, I yield myself the
balance of my time.
Again, Mr. Speaker, we support this legislation. But it is
interesting, you know, with the 10-year T-bill rate at 4 percent and
the 2-year bill or the 3-year bill at about 1.5 to 2 percent, that a
very select group of lenders can get 9.5 percent, the only place in the
world you can get a return of 9.5 percent on your money, or the
difference between the margin there. It is the only place in the world
you can go to get this money, unless you are borrowing from the Mafia.
But what happens with this legislation is, while hiding behind a
legitimate claim by nonprofits, they keep open the recycling loophole
that is overwhelmingly used, according to the General Accountability
Office, by for-profit lenders. Nothing to do with retroactivity,
because we stop this practice in the future, and we can stop recycling
in the future.
But they have chosen not to do it. They said, if the Democrats had
cooperated, they would have done this earlier. Well, we are
cooperating, so do it. It is earlier. Do it now. We have this newfound
power bestowed upon us by the chairman of the committee. We want it
now.
You said you did not do it because we did not cooperate. The more I
think about it, it was a brilliant strategy because we did not have to
take all that other stuff in your legislation, where these kids were
going to lose their rights to low-interest loans and be able to lock in
low-interest loans in repayments. We did not have to take all that,
which would have punished millions of young people, and we are going to
get this loophole closed, too.
Sounds like a brilliant piece of strategy. And here we are at the end
of the session with the Republicans implementing, talk about
bipartisanship, the Republicans are now implementing this Democratic
strategy. It is a wonderful evening to be here at midnight to finally
see where the Republicans are saying the Democrats made us do it.
Mr. Speaker, we enthusiastically support this bill. We hope that the
Republicans next year will go the full steps to closing the loophole in
its entirety.
Mr. Speaker, I yield back the balance of my time.
Mr. BOEHNER. Mr. Speaker, I yield myself the balance of my time.
Mr. Speaker, I never cease to be amazed at what happens during
political silly season here in the Nation's Capital.
{time} 0015
Here we are on the eve of an election and we are going to have a
virtual unanimous vote on this bill. Even though my colleagues on the
other side have criticized it so much, for a bill that sounds as bad as
they have criticized it, I am wondering why they are going to vote for
it.
But I want to say, Welcome. Welcome. They are taking credit for
stumbling across this billion-dollar excess subsidies when we have been
working on this for about a year to try to shut this down in a
reasonable and responsible way. And while I know that people want to go
all the way and shut it down and be really tough, what about those
nonprofit student aid organizations around the country who have these
loans, who use those excess profits to help low-income students and
mostly minority students all over the country?
Let us stop the nonsense. Let us get on to do the people's work. By
passage of this bill today, we will end this practice for the most part
for the next year, use those savings to help expand the need for high
quality teachers in title I schools in math, science and special ed,
and help more students get a better chance at an education.
Mr. CASTLE. Mr. Speaker, I rise in support of H.R. 5186, and thank
the gentleman from Ohio (Mr. Boehner) for bringing this measure to the
floor today. The bill represents responsible use of the taxpayers'
dollars, and will go a long way in giving our Nation's math, science,
and special education teachers much needed support.
What we are talking about today is a special category of student
loans for which the government guarantees the lenders a return of 9.5
percent, even though the prevailing rate charged to students may be
much lower. The 9.5 percent loans, backed by tax-exempt bonds, were
established when interest rates were high in the 1980's to keep lenders
in the college loan business. As interest rates declined over the past
several years lenders have essentially been able to find a loophole
ensuring the subsidy will continue. This is appalling, and according to
a recent GAO report, the subsidy payments for 9.5 percent loans have
risen from $209 million in fiscal year 2001 to $556 million in fiscal
year 2003 and hit $634 million in the first three quarters of fiscal
year 2004.
In the past year the President and the vast majority of this House
have called for an elimination of the subsidy. Despite attempts to
phase out the subsidy, we have not been successful until today. As
Members of Congress we have a duty to responsibly spend the taxpayers'
money. This is clearly a case where we were in the wrong, and we must
now act to remedy the situation. This is especially true when you
consider the fact that the savings from closing the loophole will
provide additional loan forgiveness to address teacher shortages in key
subjects.
Loan forgiveness will be expanded from the current maximum of $5,000
to a new maximum of $17,500 for highly-qualified math, science, and
special education teachers who agree to teach for five or more years in
high-poverty schools. Teachers in low income schools across the country
currently receive loan forgiveness. While I wish we could find a way to
increase assistance to more teachers, the fact is that a crisis exists
with our math, science, and special education teachers. In the wake of
No Child Left Behind's requirement to have a highly qualified teacher
in every classroom, this assistance will go a long way in helping to
meet the requirement.
Today's measure is a combination of sound fiscal responsibility and
an effort to help students across the country. A mixture of the two
things I work toward every day. I urge my colleagues to support the
bill.
Mr. WILSON of South Carolina. Mr. Speaker, I rise in support of H.R.
5186, the Taxpayer-Teacher Protection Act. In doing so, I'd like to
thank Chairmen Boehner and McKeon for their leadership on this issue,
supported by Majority Leader Tom DeLay.
H.R. 5186 moves efficiently and effectively to end unfair subsidies
for lenders in the student loan program and redirects those funds to
assist the teachers of this country. What could be better? While it
took some time for my colleagues on the other side of the aisle to
agree with us on the need to stop the excess subsidies for student loan
providers, I'm confident that today, we all recognize the importance of
the measure before us. I'm also certain they agree with us on the need
to assist teachers, given their past votes of overwhelming support on
similar teacher loan forgiveness bills.
This bill is straightforward and increases the amount of loan
forgiveness for secondary math and science teachers and for K-12
special education teachers to a maximum of $17,500 from the $5,000
currently provided in the Higher Education Act for all teachers in
high-poverty schools.
This bill is similar to legislation I introduced, H.R. 438, which
passed the House with strong bipartisan support by a margin of 417-7 on
July 9, 2003.
The purpose of the bill is to ensure our future workforce is
scientifically literate and competent, skills that the Committee for
Economic Development and the American Society of Mechanical Engineers
have identified as keys to our country's ability to compete in the
global marketplace. Unfortunately, our high school students
consistently test toward the bottom in math and science compared to the
rest of the world.
Teachers working in schools that face the greatest difficulty in
recruiting math, science and special-ed teachers will be eligible for
the increased amount of loan forgiveness after teaching for five years.
This commitment to these schools and the students they serve is well
worth the recognition and support of this Congress. To further assist
children in low-income schools, eligible teachers must be highly
qualified as required by the No Child Left Behind Act.
I look forward to the day when a group of math, science and special-
ed teachers begins teaching in our Nation's neediest schools inspired
by the incentives of this bill. Those teachers will clearly know they
are part of a national program designed to ensure all American children
are equipped with the life skills necessary to contribute and succeed
in a technologically driven world economy.
[[Page H8326]]
The goal with this bill, and the bill I was proud to sponsor earlier
in this session, is to ensure our Nation remains a competitive force in
the world. I hope a secondary effect will be to send a strong signal
that America honors and respects those who accept the calling to teach.
I am proud that my wife Roxanne has been a teacher in Lexington County
encouraging young people to reach their highest fulfillment. This bill
provides a common sense solution that shuts down excess profits for
loan providers, and directs the resources to one of our Nation's most
valuable resources--teachers, professional educators who make a
difference in children's lives.
I urge my colleagues to support passage of H.R. 5186.
May God bless our troops, and we will never forget September 11th.
Mr. Speaker, I want to thank you for all of your efforts in bringing
forward this very important piece of legislation. It will serve to
provide a much-needed benefit to highly qualified teachers teaching in
title I schools. The benefits provided in this legislation will
increase loan forgiveness for those teachers in the high shortage
subject areas of math, science and special education. In addition to
the important role that special education teachers play in the lives of
students with disabilities, I would also like to recognize the
importance of the many related service providers that help children
with disabilities every day. Speech-language pathologists and
audiologists provide the single largest component of related services
under IDEA and are key to providing a quality education to children
with disabilities. A number of independent studies conducted by the
U.S. Department of Education and other organizations have concluded
that we must do more to attract people into these professions, or we
will be faced with a chronic shortage of such personnel in our schools
within the next decade. I am pleased with the efforts we are making
today to address these shortages, and I look forward to working with
you in the future to do even more.
Mr. EHLERS. Mr. Speaker, I rise today in support of H.R. 5186. This
legislation ends the loophole that allowed some tax-exempt student loan
providers to reap high rates of return on certain loans. The savings
would be used to fund increased loan forgiveness for urgently needed
math, science and special education teachers in Title I schools.
Jobs of the future will require workers who understand the basic
concepts and principles of math and science. However, studies show that
our students lack even the basic math and science skills and rank near-
last in international comparisons. Our country urgently needs to
improve our math and science education in order to ensure our workers
can compete in the workplace.
Research has shown that a highly-qualified teacher with an extensive
background in subject matter and teaching skills is a very important
factor in improving student learning, especially in science,
technology, engineering and mathematics. Unfortunately, as school
districts struggle to find, train and keep qualified math and science
teachers, many have had to resort to hiring out-of-field teachers,
particularly in high schools.
Often, those with an interest in science, technology, engineering and
mathematics select college majors outside of teaching due to the
possibility of higher salaries. Increasing loans forgiveness for math
and science teachers should attract more college students to teaching
careers.
This legislation meets an urgent need, and I ask my colleagues to
support it.
Mr. BOEHNER. Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore (Mr. Mario Diaz-Balart of Florida). The
question is on the motion offered by the gentleman from Ohio (Mr.
Boehner) that the House suspend the rules and pass the bill, H.R. 5186,
as amended.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds of
those present have voted in the affirmative.
Mr. GEORGE MILLER of California. Mr. Speaker, on that I demand the
yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the
Chair's prior announcement, further proceedings on this motion will be
postponed.
____________________