[Congressional Record Volume 153, Number 23 (Wednesday, February 7, 2007)]
[Extensions of Remarks]
[Pages E290-E291]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         INTRODUCTION OF THE STUDENT LOAN SUNSHINE ACT OF 2007

                                 ______
                                 

                           HON. GEORGE MILLER

                             of california

                    in the house of representatives

                      Wednesday, February 7, 2007

  Mr. GEORGE MILLER of California. Madam Speaker, I rise to introduce 
the Student Loan Sunshine Act of 2007, a bill that aims to protect 
students and families from the predatory practices of unethical student 
loan lenders.
  This comes on the heels of an announcement made last week by the 
Attorney General of New York, expanding an ongoing investigation into 
the activities of lenders and their relationships with colleges and 
universities across the country.
  The allegations are quite troubling and are worthy of the attention 
of every state as well

[[Page E291]]

as the Federal government in the interest of protecting students and 
limited taxpayer funds.
  At issue here, Mr. Speaker, is the practice of lenders buying their 
way into colleges and universities through excessive ``inducements,'' 
or what some might term bribery.
  Over the last year stories have surfaced with lenders offering exotic 
vacations to employees of colleges as well as offering to run student 
aid offices during high volume times.
  These activities often result in lenders securing a coveted place on 
a college's ``preferred lender list.''
  While some may see this as not so troubling or not the business of 
government, I beg to differ. When these activities directly result in 
limited options for students and families in deciding how to pay for 
college, I believe it is not only our business but our responsibility 
to do something.
  Preferred lender lists are, for the most part, a non-issue with some 
colleges and universities. These institutions have indeed done the work 
of looking for the best deal in the interest of students and families 
and can justify why lenders have a place on their preferred lender 
list.
  But this is the exception rather than the rule.
  Entry into a school's preferred lender list means more than just 
having a coveted spot and a near guarantee of business, it means there 
are opportunities for lenders to prey on students and families and 
offer them private loans.
  This problem is exacerbated by the fact that students are taking out 
loans in record number and doing so before having exhausted all of 
their options with federal student loans.
  Why is this a problem? Private loans carry interest rates as high as 
19 percent--compared to federal loans that are offered at 6.8 percent.
  Something must be done about the practices by lenders to limit choice 
for students as well as encourage students to take out high-interest 
and risky private loans before exhausting all of their borrowing 
options through the federal programs.
  To begin the process of addressing this, I join my colleagues from 
the Education and Labor Committee, Ruben Hinojosa, Tim Bishop, Joe 
Courtney and John Yarmuth in introducing the Student Loan Sunshine Act. 
The legislation: Requires full disclosure of special arrangements that 
lenders and institutions of higher education have to offer loan 
products at the institution; Bans lenders from offering gifts worth 
more than $10 to college employees, including travel, lodging, 
entertainment, and in-kind services that lenders provide to college 
financial aid offices; Requires full disclosure of the reasons why an 
institution of higher education has selected a lender for its 
``preferred lender'' list, including any special arrangements the 
lender has with the school; Encourages borrowers to maximize their 
borrowing through the government's loan programs before taking out 
alternative loans and direct-to-consumer loans with higher interest 
rates.
  The legislation has also been introduced by Senators Edward Kennedy 
and Richard Durbin in the Senate.
  It is clear that we need to take steps to address the complex 
activities of lenders and their relationships with institutions. The 
Student Loan Sunshine Act is a necessary first step in starting the 
dialogue at the national level.

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