[Congressional Record Volume 153, Number 76 (Wednesday, May 9, 2007)]
[House]
[Pages H4634-H4643]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       STUDENT LOAN SUNSHINE ACT

  Mr. GEORGE MILLER of California. Mr. Speaker, I move to suspend the 
rules and pass the bill (H.R. 890) to establish requirements for 
lenders and institutions of higher education in order to protect 
students and other borrowers receiving educational loans, as amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                                H.R. 890

       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 ``Student Loan Sunshine Act''.

     SEC. 2. INSTITUTION AND LENDER REPORTING AND DISCLOSURE 
                   REQUIREMENTS.

       Title I of the Higher Education Act of 1965 (20 U.S.C. 1001 
     et seq.) is amended by adding at the end the following:

 ``PART E--LENDER AND INSTITUTION REQUIREMENTS RELATING TO EDUCATIONAL 
                                 LOANS

     ``SEC. 151. DEFINITIONS.

       ``In this part:
       ``(1) Covered institution.--The term `covered 
     institution'--
       ``(A) means any educational institution that offers a 
     postsecondary educational degree, certificate, or program of 
     study (including any institution of higher education, as such 
     term is defined in section 102) and receives any Federal 
     funding or assistance; and
       ``(B) includes an agent of the educational institution 
     (including an alumni association, booster club, or other 
     organization directly or indirectly associated with such 
     institution) or employee of such institution.
       ``(2) Educational loan.--The term `educational loan' 
     (except when used as part of the term `private educational 
     loan') means--
       ``(A) any loan made, insured, or guaranteed under title IV; 
     or
       ``(B) a private educational loan (as defined in paragraph 
     (6)).
       ``(3) Preferred lender arrangement.--The term `preferred 
     lender arrangement' means an arrangement or agreement between 
     a lender and a covered institution--
       ``(A) under which arrangement or agreement a lender 
     provides or otherwise issues educational loans to the 
     students attending the covered institution or the parents of 
     such students; and
       ``(B) which arrangement or agreement relates to the covered 
     institution recommending, promoting, endorsing, or using the 
     educational loan product of the lender.
       ``(4) Lender.--
       ``(A) In general.--The term `lender'--
       ``(i) means a creditor, except that such term shall not 
     include an issuer of credit secured by a dwelling or under an 
     open end credit plan; and
       ``(ii) includes an agent of a lender.
       ``(B) Incorporation of tila definitions.--The terms 
     `creditor', `dwelling' and `open end credit plan' have the 
     meanings given such terms in section 103 of the Truth in 
     Lending Act (15 U.S.C. 1602).
       ``(5) Officer.--The term `officer' includes a director or 
     trustee of an institution.
       ``(6) Private educational loan.--The term `private 
     educational loan' means a private loan provided by a lender 
     that--
       ``(A) is not made, insured, or guaranteed under title IV; 
     and
       ``(B) is issued by a lender expressly for postsecondary 
     educational expenses to a student, or the parent of the 
     student, regardless of whether the loan involves enrollment 
     certification by the educational institution that the student 
     attends.
       ``(7) Postsecondary educational expenses.--The term 
     `postsecondary educational expenses' means any of the 
     expenses that are included as part of a student's cost of 
     attendance, as defined under section 472.

     ``SEC. 152. REQUIREMENTS FOR LENDERS AND INSTITUTIONS 
                   PARTICIPATING IN PREFERRED LENDER ARRANGEMENTS.

       ``(a) Certification by Lenders.--In addition to any other 
     disclosure required under Federal law, each lender that 
     participates in one or more preferred lender arrangements 
     shall annually certify to the Secretary that all of the 
     preferred lender arrangements in which it participates is in 
     compliance with the requirements of this Act. Such compliance 
     of such preferred lender arrangement shall be reported on and 
     attested to annually by the auditor of such lender in the 
     audit conducted pursuant to section 428(b)(1)(U)(iii).
       ``(b) Provision of Loan Information.--A lender may not 
     provide a private educational loan to a student attending a 
     covered institution with which the lender has a preferred 
     lender arrangement, or the parent of such student, until the 
     covered institution has informed the student or parent of 
     their remaining options for borrowing under title IV, 
     including information on any terms and conditions of 
     available loans under such title that are more favorable to 
     the borrower.
       ``(c) Use of Institution Name.--
       ``(1) In general.--A covered institution that has entered 
     into a preferred lender arrangement with a lender regarding 
     private educational loans shall not allow the lender to use 
     the name, emblem, mascot, or logo of the institution, or 
     other words, pictures, or symbols readily identified with the 
     institution, in the marketing of private educational loans to 
     the students attending the institution in any way that 
     implies that the institution endorses the private educational 
     loans offered by the lender.
       ``(2) Applicability.--Paragraph (1) shall apply to any 
     preferred lender arrangement, or extension of such 
     arrangement, entered into or renewed after the date of 
     enactment of the Student Loan Sunshine Act.

     ``SEC. 153. INTEREST RATE REPORT FOR INSTITUTIONS AND LENDERS 
                   PARTICIPATING IN PREFERRED LENDER ARRANGEMENTS.

       ``(a) Duties of the Secretary.--
       ``(1) Report and model format.--Not later than 180 days 
     after the date of enactment of the Student Loan Sunshine Act, 
     the Secretary shall--
       ``(A) prepare a report on the adequacy of the information 
     provided to students and the parents of such students about 
     educational loans, after consulting with students, 
     representatives of covered institutions (including financial 
     aid administrators, registrars, and business officers), 
     lenders, loan servicers, and guaranty agencies;
       ``(B) develop and prescribe by regulation a model 
     disclosure form to be used by lenders and covered 
     institutions in carrying out subsections (b) and (c) that--
       ``(i) will be easy for students and parents to read and 
     understand;
       ``(ii) will be easily usable by lenders, institutions, 
     guaranty agencies, and loan servicers;
       ``(iii) will provide students and parents with the relevant 
     information about the terms and conditions for both Federal 
     and private educational loans;
       ``(iv) is based on the report's findings and developed in 
     consultation with--

       ``(I) students;
       ``(II) representatives from institutions of higher 
     education, including financial aid administrators, 
     registrars, business officers, and student affairs officials;
       ``(III) lenders;
       ``(IV) loan servicers;
       ``(V) guaranty agencies; and
       ``(VI) with respect to the requirements of clause (vi) 
     concerning private educational loans, the Board of Governors 
     of the Federal Reserve System;

       ``(v) provides information on the applicable interest rates 
     and other terms and conditions of the educational loans 
     provided by a lender to students attending the institution, 
     or the parents of such students, disaggregated by each type 
     of educational loans provided to such students or parents by 
     the lender, including--

       ``(I) the interest rate of the loan;
       ``(II) any fees associated with the loan;
       ``(III) the repayment terms available on the loan;
       ``(IV) the opportunity for deferment or forbearance in 
     repayment of the loan, including whether the loan payments 
     can be deferred if the student is in school;
       ``(V) any additional terms and conditions applied to the 
     loan, including any benefits

[[Page H4635]]

     that are contingent on the repayment behavior of the 
     borrower;
       ``(VI) the annual percentage rate for such loans, computed 
     determined in the manner required under section 107 of the 
     Truth in Lending Act (15 U.S.C. 1606) on the basis of the 
     actual net disbursed amount of the loan;
       ``(VII) the average amount borrowed from the lender by 
     students enrolled in the institution who obtain loans of such 
     type from the lender for the preceding academic year;
       ``(VIII) the average interest rate on such loans provided 
     to such students for the preceding academic year;
       ``(IX) contact information for the lender; and
       ``(X) any philanthropic contributions made by the lender to 
     the covered institution; and

       ``(vi) provides, in addition, with respect to private 
     educational loans, the following information with respect to 
     loans made by each lender recommended by the covered 
     institution:

       ``(I) the method of determining the interest rate of the 
     loan;
       ``(II) whether, and under what conditions, early repayment 
     may be available without penalty;
       ``(III) late payment penalties; and
       ``(IV) such other information as the Secretary may require; 
     and

       ``(C)(i) submit the report and model disclosure form to the 
     Committee on Health, Education, Labor, and Pensions of the 
     Senate and the Committee on Education and Labor of the House 
     of Representatives; and
       ``(ii) make the report and model disclosure form available 
     to covered institutions, lenders, and the public.
       ``(2) Model form update.--Not later than 1 year after the 
     submission of the report and model disclosure form described 
     in paragraph (1)(B), the Secretary shall--
       ``(A) assess the adequacy of the model disclosure form;
       ``(B) after consulting with students, representatives of 
     covered institutions (including financial aid administrators, 
     registrars, and business officers), lenders, loan servicers, 
     and guaranty agencies--
       ``(i) prepare a list of any improvements to the model 
     disclosure form that have been identified as beneficial to 
     borrowers; and
       ``(ii) update the model disclosure form after taking such 
     improvements into consideration; and
       ``(C)(i) submit the list of improvements and updated model 
     disclosure form to the Committee on Health, Education, Labor, 
     and Pensions of the Senate and the Committee on Education and 
     Labor of the House of Representatives; and
       ``(ii) make updated model disclosure form available to 
     covered institutions, lenders, and the public.
       ``(3) Use of form.--The Secretary shall take such steps as 
     necessary to make the model disclosure form, and any updated 
     model disclosure form, available to covered institutions and 
     to encourage--
       ``(A) lenders subject to subsection (b) to use the model 
     disclosure form or updated model disclosure form (if 
     available) in providing the information required under 
     subsection (b); and
       ``(B) covered institutions to use such format in preparing 
     the information reported under subsection (c).
       ``(4) Procedures.--Sections 482(c) and 492 of this Act 
     shall not apply to the model disclosure form in the 
     regulations prescribed under paragraph (1)(B), but shall 
     apply to the updating of such form under paragraph (2).
       ``(b) Lender Duties.--Each lender that has a preferred 
     lender arrangement with a covered institution shall annually, 
     by a date determined by the Secretary, provide to the covered 
     institution and to the Secretary the information included on 
     the model disclosure form or an updated model disclosure form 
     (if available) for each type of educational loan provided by 
     the lender to students attending the covered institution, or 
     the parents of such students, for the preceding academic 
     year.
       ``(c) Covered Institution Reports.--Each covered 
     institution shall--
       ``(1) prepare and submit to the Secretary an annual report, 
     by a date determined by the Secretary, that includes, for 
     each lender that has a preferred lender arrangement with the 
     covered institution and that has submitted to the institution 
     the information required under subsection (b)--
       ``(A) the information included on the model disclosure form 
     or updated model disclosure form (if available) for each type 
     of educational loan provided by the lender to students 
     attending the covered institution, or the parents of such 
     students; and
       ``(B) a detailed explanation of why the covered institution 
     believes the terms and conditions of each type of educational 
     loan provided pursuant to the agreement are beneficial for 
     students attending the covered institution, or the parents of 
     such students; and
       ``(2) ensure that the report required under paragraph (1) 
     is made available to the public and provided to students 
     attending or planning to attend the covered institution, and 
     the parents of such students, in time for the student or 
     parent to take such information into account before applying 
     for or selecting an educational loan.
       ``(d) Disclosures by Covered Institutions.--A covered 
     institution shall disclose, on its website and in the 
     informational materials described in subsection (e)--
       ``(1) a statement that--
       ``(A) indicates that students are not limited to or 
     required to use the lenders the institutions recommends; and
       ``(B) the institution is required to process the documents 
     required to obtain a loan from any eligible lender the 
     student selects;
       ``(2) at a minimum, all of the information provided by the 
     model disclosure form prescribed under subsection (a)(1)(B) 
     with respect to any lender recommended by the institution for 
     Federal student loans and, as applicable, private educational 
     loans;
       ``(3) the maximum amount of Federal grant and loan aid 
     available to students in an easy-to-understand format; and
       ``(4) the institution's cost of attendance (as determined 
     under section 472).
       ``(e) Informational Materials.--The informational materials 
     described in this subsection are any publications, mailings, 
     or electronic messages or media distributed to prospective or 
     current students and parents of students that describe, 
     discuss, or relate to the financial aid opportunities 
     available to students at an institution of higher education.

     ``SEC. 154. PRIVATE EDUCATIONAL LOAN DISCLOSURE REQUIREMENTS 
                   FOR COVERED INSTITUTIONS.

       ``A covered institution that provides information to any 
     student, or the parent of such student, regarding a private 
     educational loan from a lender shall, prior to or concurrent 
     with such information--
       ``(1) inform the student or parent of--
       ``(A) the student or parent's eligibility for assistance 
     and loans under title IV; and
       ``(B) the terms and conditions of such private educational 
     loan that are less favorable than the terms and conditions of 
     educational loans for which the student or parent is 
     eligible, including interest rates, repayment options, and 
     loan forgiveness; and
       ``(2) ensure that information regarding such private 
     educational loan is presented in such a manner as to be 
     distinct from information regarding loans that are made, 
     insured, or guaranteed under title IV.

     ``SEC. 155. INTEGRITY PROVISIONS.

       ``(a) Institution Code of Conduct Required.--
       ``(1) Code of conduct.--Each institution of higher 
     education that participates in the Federal student loan 
     programs under title IV or has students that obtain private 
     educational loans shall--
       ``(A) develop a code of conduct in accordance with 
     paragraph (2) with which its officers, employees, and agents 
     shall comply with respect to educational loans;
       ``(B) publish the code of conduct prominently on its 
     website; and
       ``(C) administer and enforce such code in accordance with 
     the requirements of this subsection.
       ``(2) Contents of code.--The code required by this section 
     shall--
       ``(A) prohibit a conflict of interest or the appearance of 
     a conflict of interest with the responsibilities of such 
     officer, employee, or agent with respect to student loans or 
     other financial aid; and
       ``(B) at a minimum, include provisions in compliance with 
     the provisions of the following subsections of this section.
       ``(3) Training and compliance.--An institution of higher 
     education shall administer and enforce a code of conduct 
     required by this section by, at a minimum, requiring all of 
     its officers, employees, and agents with responsibilities 
     with respect to student loans or other financial aid to 
     obtain training annually in compliance with the code.
       ``(b) Gift Ban.--
       ``(1) Prohibition.--A lender, guarantor, or servicer of 
     educational loans shall not offer any gift to an officer, 
     employee, or agent of a covered institution.
       ``(2) Inspector general report.--The Inspector General of 
     the Department of Education shall investigate any reported 
     violation of this subsection and shall annually submit a 
     report to the Committee on Health, Education, Labor, and 
     Pensions of the Senate and the Committee on Education and 
     Labor of the House of Representatives identifying all 
     reported violations of the gift ban under paragraph (1), 
     including the lenders involved in each such violation, for 
     the preceding year.
       ``(3) Definition of gift.--
       ``(A) In general.--In this subsection, the term `gift' 
     means any gratuity, favor, discount, entertainment, 
     hospitality, loan, or other item having a monetary value of 
     more than a de minimus amount. The term includes a gift of 
     services, transportation, lodging, or meals, whether provided 
     in kind, by purchase of a ticket, payment in advance, or 
     reimbursement after the expense has been incurred.
       ``(B) Exceptions.--The term `gift' shall not include any of 
     the following:
       ``(i) Standard informational material related to a loan or 
     financial literacy, such as a brochure.
       ``(ii) Food, refreshments, training, or informational 
     material furnished to an officer, employee, or agent of an 
     institution as an integral part of a training session that is 
     designed to improve the lender's service to the covered 
     institution, if such training contributes to the professional 
     development of the officer, employee, or agent of the 
     institution.
       ``(iii) Favorable terms, conditions, and borrower benefits 
     on an educational loan provided to a student employed by the 
     covered institution if such terms, conditions, or benefits 
     are comparable to those provided to all students of the 
     institution.
       ``(iv) Exit counseling services provided to borrowers to 
     meet a covered institution's responsibilities for exit 
     counseling as required by section 485(b) provided that--

[[Page H4636]]

       ``(I) a covered institution's staff are in control of the 
     counseling (whether in person or via electronic 
     capabilities); and
       ``(II) such counseling does not promote the products or 
     services of any lender.

       ``(C) Rule for gifts to family members.--For purposes of 
     this section, a gift to a family member of an officer, 
     employee, or agent of a covered institution, or a gift to any 
     other individual based on that individual's relationship with 
     the officer, employee, or agent, shall be considered a gift 
     to the officer, employee, or agent if--
       ``(i) the gift is given with the knowledge and acquiescence 
     of the officer, employee, or agent; and
       ``(ii) the officer, employee, or agent has reason to 
     believe the gift was given because of the official position 
     of the officer, employee, or agent.
       ``(c) Fees From Lenders for Service Prohibited.--An 
     officer, employee, or agent who is employed in the financial 
     aid office of the institution, or who otherwise has 
     responsibilities with respect to educational loans or other 
     financial aid, shall not accept from any lender or affiliate 
     of any lender (as the term affiliate is defined in section 
     487(a)) any fee, payment, or other financial benefit 
     (including the opportunity to purchase stock) as compensation 
     for consulting services, serving on an advisory council, or 
     otherwise advising such lender or affiliate.
       ``(d) Ban on Educational Loan Arrangements.--
       ``(1) Prohibition.--An institution of higher education 
     shall not enter into any educational loan arrangement with 
     any lender.
       ``(2) Definition.--For purposes of this subsection, an 
     educational loan arrangement is an arrangement between an 
     institution of higher education (or an agent of the 
     institution) and a lender under which--
       ``(A) a lender provides or issues educational loans to 
     students attending the institution or to parents of such 
     students;
       ``(B) the institution recommends the lender or the loan 
     products of the lender; and
       ``(C) the lender pays a fee or provides other material 
     benefits, including profit or revenue sharing, to the 
     institution or officers, employees, or agents of the 
     institution.
       ``(e) Ban on Staffing Assistance.--
       ``(1) Prohibition.--An institution of higher education 
     shall not request or accept from any lender any assistance 
     with call center staffing or financial aid office staffing.
       ``(2) Certain assistance permitted.--Nothing in paragraph 
     (1) shall be construed to prohibit an institution from 
     requesting or accepting assistance from a lender related to--
       ``(A) professional development training for financial aid 
     administrators; or
       ``(B) providing educational counseling materials, financial 
     literacy materials, or debt management materials to 
     borrowers, provided that such materials disclose to borrowers 
     the identification of any lender that assisted in preparing 
     or providing such materials.
       ``(f) Ban on Opportunity Pools.--An institution of higher 
     education shall not request, accept, or consider from any 
     lender any offer of funds to be used for private educational 
     loans to students in exchange for the covered institution 
     providing concessions or promises to the lender, and a lender 
     shall not make any such offer.
       ``(g) Ban on Participation on Advisory Councils.--An 
     officer, employee, or agent who is employed in the financial 
     aid office of a covered institution, or who otherwise has 
     responsibilities with respect to educational loans or other 
     financial aid, shall not serve on or otherwise participate 
     with advisory councils of lenders or affiliates of lenders. 
     Nothing in this subsection shall prohibit lenders from 
     seeking advice from covered institutions or groups of covered 
     institutions (including through telephonic or electronic 
     means, or a meeting) in order to improve products and 
     services for borrowers, provided there are no gifts or 
     compensation (including for transportation, lodging, or 
     related expenses) provided by lenders in connection with 
     seeking this advice from such institutions.

     ``SEC. 156. COMPLIANCE AND ENFORCEMENT.

       ``(a) Condition of Any Federal Assistance.--Notwithstanding 
     any other provision of law, a covered institution or lender 
     shall comply with this part as a condition of receiving 
     Federal funds or assistance provided after the date of 
     enactment of the Student Loan Sunshine Act.
       ``(b) Penalties.--Notwithstanding any other provision of 
     law, if the Secretary determines, after providing notice and 
     an opportunity for a hearing for a covered institution or 
     lender, that the covered institution or lender has violated 
     subsection (a)--
       ``(1) in the case of a covered institution, or a lender 
     that does not participate in a loan program under title IV, 
     the Secretary may impose a civil penalty in an amount of not 
     more than $25,000; and
       ``(2) in the case of a lender that does participate in a 
     program under title IV, the Secretary may limit, terminate, 
     or suspend the lender's participation in such program.
       ``(c) Considerations.--In taking any action against a 
     covered institution or lender under subsection (b), the 
     Secretary shall take into consideration the nature and 
     severity of the violation of subsection (a).''.

     SEC. 3. PROGRAM PARTICIPATION AGREEMENTS.

       Section 487(a) of the Higher Education Act of 1965 (20 
     U.S.C. 1094(a)) is amended by adding at the end the 
     following:
       ``(24)(A) In the case of an institution (including an 
     officer (including a director or trustee), employee, or agent 
     of an institution) that maintains a preferred lender list, in 
     print or any other medium, through which the institution 
     recommends 1 or more specific lenders for educational loans 
     (as such term is defined in section 151 of this Act, but 
     excluding loans under part D of this title) to the students 
     attending the institution (or the parents of such students), 
     the institution will--
       ``(i) clearly and fully disclose on the preferred lender 
     list--
       ``(I) why the institution has included each lender as a 
     preferred lender, especially with respect to terms and 
     conditions favorable to the borrower; and
       ``(II) that the students attending the institution (or the 
     parents of such students) do not have to borrow from a lender 
     on the preferred lender list;
       ``(ii) ensure, through the use of the list provided by the 
     Secretary under subparagraph (C), that--
       ``(I) there are not less than 3 lenders named on the each 
     preferred lending list offered by the institution that are 
     not affiliates of each other; and
       ``(II) the preferred lender list--

       ``(aa) specifically indicates, for each lender on the list, 
     whether the lender is or is not an affiliate of each other 
     lender on the list; and
       ``(bb) if the lender is an affiliate of another lender on 
     the list, describes the specifics of such affiliation;

       ``(iii) establish and prominently disclose a process to 
     ensure that lenders are placed upon the preferred lender list 
     on the basis of the benefits provided to borrowers, 
     including--
       ``(I) highly competitive interest rates, terms, or 
     conditions for loans made under part B;
       ``(II) high-quality servicing for such loans; or
       ``(III) additional benefits beyond the standard terms and 
     conditions for such loans;
       ``(iv) exercise a duty of care and a duty of loyalty to 
     compile the preferred lender list without prejudice and for 
     the sole benefit of the student;
       ``(v) not deny or otherwise impede the borrower's choice of 
     a lender or cause unnecessary delays in loan certification 
     under this title for those borrowers who choose a lender than 
     has not been recommended or suggested by the institution.
       ``(B) For the purposes of subparagraph (A)(ii)--
       ``(i) the term `affiliate' means a person that controls, is 
     controlled by, or is under common control with another 
     person; and
       ``(ii) a person controls, is controlled by, or is under 
     common control with another person if--
       ``(I) the person directly or indirectly, or acting through 
     1 or more others, owns, controls, or has the power to vote 5 
     percent or more of any class of voting securities of such 
     other person;
       ``(II) the person controls, in any manner, the election of 
     a majority of the directors or trustees of such other person; 
     or
       ``(III) the Secretary determines (after notice and 
     opportunity for a hearing) that the person directly or 
     indirectly exercises a controlling interest over the 
     management or policies of such other person.
       ``(C) The Secretary shall maintain and update a list of 
     lender affiliates of all eligible lenders, and shall provide 
     such list to the eligible institutions for use in carrying 
     out subparagraph (A).''.

     SEC. 4. NOTICE OF AVAILABILITY OF FUNDS FROM FEDERAL SOURCES.

       Section 128 of the Truth in Lending Act (15 U.S.C. 1638) is 
     amended by adding at the end the following:
       ``(e) Disclosures Relating to Private Educational Loans.--
       ``(1) In general.--In the case of an extension of credit 
     that is a private educational loan, other than a loan secured 
     by a dwelling or an open end credit plan, the creditor shall 
     provide in every application for such extensions of credit 
     and together with any solicitation, marketing, or 
     advertisement of such extensions of credit, written, 
     electronic, or otherwise, the disclosures described in 
     paragraph (2).
       ``(2) Disclosures.--Disclosures required by this subsection 
     shall include a clear and prominent statement--
       ``(A) that the borrower may qualify for Federal financial 
     assistance through a program under title IV of the Higher 
     Education Act of 1965, in lieu of or in addition to a loan 
     from a non-Federal source;
       ``(B) that in many cases, a Federal student loan may 
     provide the consumer with more beneficial terms and 
     conditions, including a lower annual percentage rate and 
     fewer and lower fees, than private educational loans;
       ``(C) that the consumer may obtain additional information 
     concerning such Federal financial assistance from their 
     institution of higher education or at the website of the 
     Department of Education; and
       ``(D) such other information as the Board may require.
       ``(3) Clear and conspicuous disclosure.--The disclosure 
     required under paragraph (2) shall be placed in a conspicuous 
     and prominent location on or with any written application, 
     solicitation, or other document or paper relating to any 
     extension of credit consisting of or involving a private 
     educational loan for which such disclosure is required under 
     this subsection.
       ``(4) Written acknowledgment of receipt.--In each case in 
     which a disclosure is provided pursuant to paragraph (2) and 
     an application initiated, a creditor shall obtain

[[Page H4637]]

     a written acknowledgment from the consumer that the consumer 
     has read and understood the disclosure.
       ``(5) Additional disclosures.--In the case of an extension 
     of credit that is a private educational loan, other than a 
     loan secured by a dwelling or an open end credit plan, the 
     creditor shall make available, in a clear and accessible 
     manner (including through the website of the creditor), the 
     information required by sections 153(a)(1)(B)(iv) and (v) of 
     the Higher Education Act of 1965.
       ``(6) Provision of information.--Before a creditor may 
     issue any funds with respect to an extension of credit 
     described in paragraph (1) for an amount equal to more than 
     $1,000, the creditor shall notify the relevant postsecondary 
     educational institution, in writing, of the proposed 
     extension of credit and the amount thereof.
       ``(7) Regulatory authority.--The Board--
       ``(A) shall issue such rules and regulations as may be 
     necessary to implement this subsection; and
       ``(B) may, by rule, establish appropriate exceptions to the 
     requirements of this subsection.
       ``(8) Definitions.--As used in this subsection, the terms 
     `private educational loan' and `covered institution' have the 
     same meanings as in section 151 of the Higher Education Act 
     of 1965.''.

     SEC. 5. IMPROVED INFORMATION CONCERNING THE FEDERAL STUDENT 
                   FINANCIAL AID WEBSITE.

       Section 131 of the Higher Education Act of 1965 (20 U.S.C. 
     1015) is amended by adding at the end the following new 
     subsection:
       ``(e) Promotion of the Department of Education Federal 
     Student Financial Aid Website.--The Secretary--
       ``(1) shall display a link to the Federal student financial 
     aid website of the Department of Education in a prominent 
     place on the homepage of the Department of Education website; 
     and
       ``(2) may use administrative funds available for the 
     Department's operations and expenses for the purpose of 
     advertising and promoting the availability of the Federal 
     student financial aid website.
       ``(f) Promotion of Availability of Information Concerning 
     Student Financial Aid Programs of Other Departments and 
     Agencies.--
       ``(1) Availability of information.--The Secretary shall 
     ensure that the eligibility requirements, application 
     procedures, financial terms and conditions, and other 
     relevant information for each non-departmental student 
     financial assistance program are easily accessible through 
     the Federal student financial aid website and are 
     incorporated into the search matrix on such website in a 
     manner that permits students and parents to readily identify 
     the programs that are appropriate to their needs and 
     eligibility.
       ``(2) Agency response.--Each Federal department and agency 
     shall promptly respond to surveys or other requests for the 
     information required by paragraph (1), and shall identify for 
     the Secretary any non-departmental student financial 
     assistance program operated, sponsored, or supported by such 
     Federal department or agency.
       ``(3) Definition.--For purposes of this subsection, the 
     term `non-departmental student financial assistance program' 
     means any grant, loan, scholarship, fellowship, or other form 
     of financial aid for students pursuing a postsecondary 
     education that is--
       ``(A) distributed directly to the student or to the 
     student's account at the institution of higher education; and
       ``(B) operated, sponsored, or supported by a Federal 
     department or agency other than the Department of 
     Education.''.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
California (Mr. George Miller) and the gentleman from California (Mr. 
McKeon) each will control 20 minutes.
  The Chair recognizes the gentleman from California (Mr. George 
Miller).


                             General Leave

  Mr. GEORGE MILLER of California. Mr. Speaker, I ask unanimous consent 
that all Members may have 5 legislative days to insert materials 
relevant to H.R. 890 into the Record.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from California?
  There was no objection.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield myself such 
time as I may consume.
  Mr. Speaker, I rise in support of this legislation, H.R. 890, the 
Student Loan Sunshine Act of 2007. I offer this legislation along with 
Mr. McKeon, the senior Republican on the Education and Labor Committee; 
and Mr. Hinojosa, the subcommittee Chair of the Higher Education 
Subcommittee on the Education and Labor Committee.
  This legislation would protect students and families from the corrupt 
practices and abuses that for too long have been allowed to run rampant 
within the student loan industry.
  Ensuring that our Nation's student loan programs are working as 
effectively as possible to help students and parents pay for the cost 
of a college education, it is paramount to the goals of this Nation 
recognizing the importance of students' achieving a college education 
so they can fully participate in American society and the American 
economy. And working to make that more accessible and affordable has 
been the long-term goal of both parties of this government.
  But now what we see is that this program has been badly corrupted. 
This program has started to be hollowed out by the activities of 
lenders, of universities, of individuals within the government, 
individuals within the university system, individuals within the 
lending community. For 6 years this administration has been put on 
notice of these activities taking place in the student lending program 
with ever-mounting evidence and public statements and concerns echoed 
by members within the administration from the previous administration 
calling to the problems that were occurring within the student loan 
programs. It is becoming increasingly clear that the student loan 
program has been hijacked by third parties who saw that they could run 
this program to their financial benefit. Unfortunately, that meant that 
it was being run to the detriment of the students and the families who 
are borrowing the money who are struggling to pay this money back so 
that they could achieve a college education.
  We introduced this legislation first in February when it was 
disclosed by New York Attorney General Andrew Cuomo that he was 
expanding an investigation into the relationships between lenders and 
colleges and universities across the country.
  Throughout the previous years, stories have surfaced about 
inducements and kickbacks and conflicts of interests, bribes and 
payoffs ranging from sending college employees on exotic vacations to 
staffing school financial aid offices during the busiest time of the 
student aid calendar. These inducements are offered by lenders to 
secure a spot on the preferred lender list, a list that supposedly 
presents to the students and to their families that this is a list of 
trust, that these are the best loans available for a number of reasons 
to those students. But we now learn that securing a position on a 
preferred lender list was really, in many instances with many 
universities and with many lenders, an act of corruption, not an act of 
transparency, not an act of honesty, not an act in the best interest of 
the students and/or their parents, and not in the best interest of 
achieving the lowest possible cost for those students' education.
  But entry into the preferred lender meant more than just having this 
coveted spot. It meant a near guarantee of business. It meant an 
opportunity for lenders to prey on families and offer them private 
loans. It also meant that students weren't given the best information, 
the most accurate information. It also meant increased cost to the 
students and to their families.
  Since we first introduced this bill, ongoing investigations at the 
Federal and State levels and by news organizations have shed new light 
on the scope of the corruption and the conflicts of interest 
surrounding these lists that are undermining the Federal student loan 
aid program that millions of borrowers have come to depend upon. We 
have learned more about the astonishing degree to which lenders buy 
their way into colleges and universities through excessive inducements, 
which is the polite word, or what might be termed ``bribery,'' which 
might be a better word, in order to boost their marginal profits.
  All of this, all of this was known to the Department of Education. 
Suggested changes were left behind by the Clinton administration to 
this program. Department employees raised these concerns and others 
with the Department of Education, and no action was, in fact, taken. 
And what we see, of course, is that less protection was provided to 
students and to their families.
  We have learned that these inducements include college officials 
being paid to serve on lender advisory boards and receiving stock in 
the companies. We have learned that these conflicts of interest do not 
end with college financial aid officers. It has been revealed that at 
least one public official in the Office of Federal Student Aid, the arm 
of the Department of Education that runs the student aid program, held 
hundreds of thousands of dollars of stock in a major student loan 
company.

[[Page H4638]]

  But this is just the tip of the iceberg. Lenders and schools must be 
held accountable for any practice that compromises the trust that 
students and parents deserve to have in our Federal student aid 
program. Today, by passing the Student Aid Sunshine Act, we are taking 
clear and important actions to put an end to the corrupt practices and 
conflicts of interest that for too long have been allowed to dominate 
this industry.

                              {time}  1030

  We call on lenders, institutions and the Department of Education to 
also take appropriate action to end these practices, and we insist that 
they recognize their fiduciary responsibility to the students and their 
parents who are the borrowers of this money, the borrowing of money 
that they struggle to pay back for many years afterwards.
  I am proud to be joined by my colleagues on the Education and Labor 
Committee, Buck McKeon, the senior Republican, and, again, Ruben 
Hinojosa of the Subcommittee on Higher Education to bring to the floor 
a stronger, more comprehensive, bipartisan Student Loan Sunshine Act. 
This bill will prevent these egregious practices from occurring in the 
future by reinstating trust in our schools through strict codes of 
conduct, guaranteeing loan options and ensuring the best loan possible, 
ensuring equal and timely processing of loans, giving students full and 
fair information when taking out and repaying loans, protecting 
students from aggressive marketing practices and inserting the 
fiduciary responsibility for all parties to these agreements.
  Further, this bill bans all gifts, participation on advisory boards 
and risk-sharing agreements between lenders and schools and ensures 
greater transparency and accountability when schools recommend lenders 
for the students.
  I urge all of my colleagues to join us in voting for this 
legislation. Today, I think we can take this critical step toward 
returning these programs to the very people they were intended to 
serve, students and parents who are borrowing this money. It's time to 
protect these students and parents and end the exploitation and the 
abuses of the student loan program.
  Again, I want to thank my colleagues on the committee for all their 
assistance in drafting this legislation.
  Mr. Speaker, I reserve the balance of my time.
  Mr. McKEON. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise in support of this legislation and thank Chairman 
Miller and Chairman Hinojosa, Ranking Member Keller, and their staffs 
and my staff for striking a bipartisan accord to advance this bill.
  I have often said that in order to begin reaffirming trust in our 
student aid system all stakeholders must step up. That means lenders, 
colleges, the Education Department, States and Congress all have a role 
to play.
  Within the past few weeks, Secretary of Education Spellings 
established an internal task force to review her Department's oversight 
of Federal student loan programs; and, today, the U.S. House is 
stepping up as well. It is an important step, to be sure. We are 
stepping up today for a single, fundamental reason, to ensure our 
Nation's financial aid system continues to serve the need of the 
students who depend on it for the opportunity to get an education.
  This isn't about us versus the lenders or us versus the financial aid 
officers, and this isn't about direct loans versus the market-based 
FFEL program. And, for the record, I continue to strongly support FFEL 
and a healthy competition between the two Federal programs. This is 
about protecting the interests of millions of young men and women who 
expect our student aid system to be there for them when they need it.
  Several weeks ago, my Education and Labor Committee colleague, Mr. 
Keller, and I introduced comprehensive legislation to begin the process 
of reaffirming our trust in the financial aid system. I am proud that 
our bill served as an impetus for bringing the measure before us to the 
House floor.
  Our legislation built on many of the financial aid reform 
recommendations Chairman Miller made earlier this year, and I am 
pleased that what we are poised to advance today reflects a broad 
agreement to set these important reforms into motion.
  Like my bill and Chairman Miller's bill, the bipartisan agreement we 
will vote on today does not explicitly outlaw the practice of preferred 
lender lists. Rather, it reforms this practice to ensure that it 
continues to serve the interests of our students. Like my bill and 
Chairman Miller's bill, the bipartisan agreement we will vote on today 
aims to protect against conflicts of interest between lenders and 
financial aid officers. And like my bill and Chairman Miller's bill, 
the bipartisan agreement we will vote on today allows lenders to seek 
advice from institutions in order to improve products and services for 
students.
  However, the measure Mr. Keller and I introduced went even further 
than past recommendations, and I am pleased the agreement we will vote 
on today incorporates our important modifications. For example, just as 
in the bill I authored with Mr. Keller, the measure before us asks 
colleges to develop their own unique codes of conduct that must include 
restrictions on anything else that may give the appearance of a 
conflict of interest between financial aid officers and lenders. And 
just as in the bill I authored with Mr. Keller, the measure before us 
bans revenue sharing between lenders of private loans and colleges or 
universities.
  Mr. Speaker, the FFEL and other financial aid programs successfully 
serve millions of students and their families every year, and this bill 
makes our system even better. As we move forward from here, we must not 
lose sight of the fact that the Federal financial aid system must work 
for students and colleges alike. We must be careful not to overreach, 
as Congress does all too often, but we do need to reaffirm our trust in 
the system. I believe this bill does just that.
  I urge my colleagues to join me in supporting it.
  Mr. Speaker, I reserve the balance of my time.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield myself 15 
seconds.
  Mr. Speaker, I failed to acknowledge and I want to acknowledge Mr. 
Keller's help in the drafting of this legislation. He is the senior 
Democrat on the Higher Education Subcommittee.
  I would like to yield 3\1/2\ minutes to the Chair of that 
subcommittee, Mr. Hinojosa.
  Mr. HINOJOSA. Mr. Speaker, I rise in strong support of H.R. 890, the 
Student Loan Sunshine Act. This is the legislation that cannot wait. 
Given the daily revelations of scandals, conflicts of interest and cozy 
relationships that undermine public confidence in our student loan 
programs, it is imperative that we act now to restore integrity.
  I would like to thank Chairman Miller and Ranking Member McKeon, as 
well as the ranking member of the subcommittee from Florida, Ric 
Keller, in approaching this legislation with urgency and 
bipartisanship. It is time to take a stand and put the interests of 
students and families first. This legislation is an important signal 
that we in Congress are committed to doing just that.
  Mr. Speaker, this legislation will ban the most egregious practices 
that have been uncovered by Attorney General Cuomo in New York. Just 
read the New York Times this morning and you will see all that has been 
uncovered. It will require lenders and institutions alike to adhere to 
a strict code of conduct. It will ensure that preferred lender lists 
are based on the best deal for students. It will ensure that students 
and families have accurate, unbiased information about their loan 
options. It will ensure that borrowers are able to exhaust their 
Federal loan eligibility before being steered to pricier private loan 
packages.
  The crisis of confidence in our student loan programs shines a light 
on a larger problem. We have a crisis in college affordability for our 
low- and middle-income families. College costs are rising rapidly, and 
Federal student aid has not kept pace. According to the Advisory 
Committee on Student Financial Assistance, paying for a 4-year public 
university costs our lowest-income families 87 percent of their income. 
We are expecting these families to come up with over $10,000 per year 
through work or loans to pay for college.
  Quite simply, we have left low- and middle-income families to fend 
for

[[Page H4639]]

themselves when it comes to financing a college education. After 4 
years of stagnation, the maximum Pell Grant stands at only $4,310. We 
have left families rudderless when it comes to navigating the explosive 
growth in the student loan programs. We have not looked after their 
interests.
  After listening to many representatives of Federal and private 
college loan programs, I am convinced that we here in Congress must 
take this bipartisan action to restore integrity to this important 
program. The Student Loan Sunshine Act is a first step in restoring 
faith in our student aid programs and fulfilling the promise of the 
Higher Education Act.
  Mr. Speaker, we have more work to do, but let's get this job done 
today. I strongly urge my colleagues to support H.R. 890, the Student 
Loan Sunshine Act.
  Mr. McKEON. Mr. Speaker, I yield now 4 minutes to the ranking member 
Republican on the Higher Education Subcommittee, the gentleman from 
Florida (Mr. Keller).
  Mr. KELLER of Florida. I thank the gentleman for yielding. And I 
appreciate the Freudian slip by Congressman Chairman Miller. I still am 
Republican. I am reminded every day when my parking space is now out in 
Maryland that I'm a Member of the minority party here.
  I rise today in support of the Student Loan Sunshine Act, H.R. 890, 
for three specific reasons.
  First, this legislation fully includes legislation that I authored 
called the One-Stop Financial Aid Information Act, H.R. 1522, which 
creates an easy-to-use one-stop Web site for students and their 
families about financial aid information for college, including 
information about Pell Grants, student loans and scholarships offered 
by various Federal agencies. Far too many young people give up on their 
chance to go to college because they lack information about the various 
grants and scholarships available to them. Now they will have all this 
information right there at their fingertips as a result of an easy-to-
access link right there on the home page of ed.gov.
  I want to especially thank Congressman Henry Cuellar of Texas. It was 
Congressman Cuellar who actually conceived of this idea and shared it 
with me on a codel that he and I had to Iraq based on his positive 
experience with a similar Web site in Texas, and he is a coauthor of 
this provision.
  The second reason I support this legislation is because it 
specifically includes a financial aid code of conduct that must be 
adopted by colleges; and that language is taken out of the bill 
authored by Congressman Buck McKeon called the Financial Aid 
Accountability and Transparency Act, H.R. 1994. In a nutshell, it 
provides that there shall be no conflicts of interests, gifts or 
revenue sharing between lenders and colleges or their employees.
  The third reason I support this legislation is because it does not 
ban preferred lender lists under the market-based FFEL program. Now 
after the recent student loan scandal, some of which was highlighted by 
Attorney General Andrew Cuomo of New York, there was a temptation on a 
handful of people's part to overreact. Some wanted to abolish or place 
a moratorium on preferred lender lists. Some even suggested that we 
switch from the market-based FFEL program to direct lending. This 
appropriate legislation doesn't contain that overreaction, and I'm 
proud that it doesn't, and the reason is preferred lender lists play a 
very positive role when done right.
  There are literally over a thousand student lenders. Some of those 
lenders have lower interest rates, low origination fees, more flexible 
terms for deferring repayments and better customer service. On the 
other hand, there are lenders that have higher rates and fees, bad 
customer service and can be characterized as fly-by-night operations. 
It's pretty hard to tell if you're an 18-year-old kid which lender is 
which, but if you're a financial aid administrator who has been in the 
business for two or three decades, you can give some guidance into that 
issue.
  This bill specifically allows these preferred lenders to still have a 
preferred lender list, provided that each college gives a choice of at 
least three lenders, the college disclose why they were selected as a 
lender, and the college disclose what terms they remain a lender. That 
is a pretty fair and appropriate response to the scandals that we have 
had and a pretty good contrast to what we have with the Federal direct 
lending program where a college says you only have one lender, it's the 
Federal Government, and there is no competition for lower fees or 
rates.
  In closing, Mr. Speaker, this legislation helps to rein in some of 
the bad apples in the student loan industry, while preserving the 
healthy and appropriate competition between the direct lending and FFEL 
program. For these reasons, I urge my colleagues to vote ``yes'' on 
this legislation.
  Mr. GEORGE MILLER of California. I yield 2 minutes to the gentlewoman 
from California (Ms. Woolsey).

                              {time}  1045

  Ms. WOOLSEY. Mr. Speaker, I want to thank Chairman Miller and Ranking 
Member McKeon for putting forth a good and necessary bill to protect 
our college students from the loan industry practices that actually 
work against, not for, those students who need the help. Every student 
in America who wants to go to college deserves the opportunity to do 
so, and we need to make it easier for them to go to school, not harder. 
Our students deserve all the help we can give them to ensure that they 
not only get a good education, but that they also don't come out of 
college saddled with loans or interest rates that will haunt them for 
years and years to come.
  This bill will ensure that the student loan companies and some 
financial aid officers can no longer benefit from directing students to 
any particular loan company. What a concept. Loans should be for our 
children and for our students, not for those who are involved in the 
industry.
  The Student Loan Sunshine Act ensures that students get the best 
possible options when deciding on a loan. A vote for this bill is a 
vote for our college students and for giving every child the 
opportunity to succeed in life, and indeed it is a vote for the future 
of the United States of America, because these young people are our 
future.
  Mr. McKEON. Mr. Speaker, I reserve the balance of my time.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield 2 minutes to 
the gentlewoman from Florida (Ms. Wasserman Schultz).
  Ms. WASSERMAN SCHULTZ. Mr. Speaker, I rise in support of the Student 
Loan Sunshine Act, and I congratulate Chairman Miller for bringing the 
principles of honest leadership to higher education financing.
  The cost of higher education has increased dramatically over the past 
few years, making college less affordable for many families. Financial 
aid is an important tool in helping make the cost of college more 
affordable. The people and institutions that administer these loans 
must be held to the highest ethical standards. For most students, their 
college loan will be their first form of major debt after their 
graduation.
  As we encourage financial literacy and responsibility among this 
generation of young people, we must ensure that students are protected. 
They need to understand and know that their lenders and their financial 
aid administrators are in their corner and that they don't have 
individuals that are trying to undermine them or make money on the 
backs of these students.
  Financing a college education is dependent on industry and 
institutional accountability. Strict codes of conduct will ensure this 
accountability.
  Additionally, I am also supportive of the Department of Education's 
efforts to install new safeguards to protect students' privacy. We need 
to make sure that our students can have the utmost confidence in the 
system that is designed to provide them the opportunity to pay off 
their loans after their education and go on to become productive 
members of our society.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield 2\1/2\ minutes 
to the gentleman from Illinois (Mr. Emanuel).
  Mr. EMANUEL. Mr. Speaker, I would like to thank the chairman and the 
ranking member for their leadership on this issue.
  Mr. Speaker, not one of us would be here if it wasn't for the ability 
to afford a college education, and although we are talking about 
cleaning up a mess, it is quite clear we should also remember what is 
happening here. For a long time, there was no oversight or

[[Page H4640]]

any accountability in administration, and people from industry were 
actually in the responsibility, and their response was to govern and 
oversee industry they came from. So what did they do? They cut out the 
middleman. There is no need for a lobbyist, because the industry is the 
government in this case.
  What is most ironic in this situation on the student loan situation 
is industry was getting taxpayer subsidies to run a business in which 
the very students that were also dependent on their parents were also 
paying the bill. They were paying on the front end and on the back end. 
And it was a total rip-off of the American taxpayers. And it is on a 
subject, college education, that is so essential, because we know, 
today, in the new economy, you earn what you learn.
  What we are taking is people's ability to achieve the American Dream, 
which is so essential, a college education, that ticket to the American 
Dream. And rather than see what was an honorable profession, something 
important that could be done with good business practices, it has 
turned into a scandal that has affected both the schools and the 
administrators of those schools, public officials responsible for it, 
and the lenders in that industry. It was affecting everybody.
  Now, I hope, and from conversations with the chairman, we can rest 
assured this is just the first step in changing the rules of the game 
so industry and those in the lending industry understand and those in 
the regulatory side of it that there is a new way we are going to do 
business. And there is a new code of conduct for both the public 
officials and those in the lending industry, because we must 
fundamentally remember, a college education is a ticket to the American 
Dream, in a society and economy where you earn what you learn.
  I do want to recognize the Attorney General of New York for leading 
this effort, for Congress in a bipartisan fashion stepping up to the 
plate and taking the first step with this sunshine act.
  But we are not done in cleaning up the mess as it relates to the 
college loan industry. This is only the first step to doing that, to 
cleaning up this mess, because it relates to other areas. We saw it 
today when the individual responsible for the oil and gas leasing and 
royalty payment industry because of congressional oversight is now 
stepping down because it is clear taxpayers were not given their fair 
shake.
  We are doing the right job, and I commend both parties in the 
committee for holding these oversight hearings and producing this 
legislation and hope that we continue, as we did in the Six in '06, we 
voted, first of all, to cut the interest rates on student loans; we 
take this sunshine act, we come back with the higher education bill. We 
come with the FASA reform. We constantly make sure that we are 
reforming higher education and the access to higher education, so we 
serve the people who are doing right, working hard, paying taxes and 
raising their kids with the right sense of values to do right. This is 
an industry that needs a whole top-to-bottom cleaning and washing.
  Thank you for your leadership, Mr. Chairman.
  Mr. Speaker, for the past 6 years, the public has had to watch as 
scandal after scandal fell on deaf Republican ears.
  How times have changed.
  Today, Democrats are demanding accountability and ending business as 
usual.
  We've put the spotlight on the rampant corruption in the Bush 
administration and the scandals that used to be shoved under the rug 
are now being exposed.
  And the new Democratic Congress is getting results for the American 
people.
  The latest corruption scandal involves lenders, schools and public 
officials and has undermined a vital student loan program that millions 
of students depend on.
  On Monday the New York Times reported that over 4 years ago a 
researcher at the Education Department tried to warn his supervisors 
that student lending companies were improperly collecting hundreds of 
millions in overpayments.
  Big companies were getting millions from the very taxpayers who were 
getting the bill on the other side. So what did the Bush administration 
do?
  Nothing.
  Top officials at the Department of Education's Student Aid Office 
made millions when they sold stock they held in lending companies.
  What did the Department do when confronted with this obvious conflict 
of interest?
  Nothing.
  It wasn't until the media and this Congress began in oversight 
demanding accountability that these officials were put on leave. And 
yesterday, the head of Federal Student Aid abruptly announced her 
resignation.
  Additionally, the Attorney General of New York uncovered a number of 
improper relationships between lenders and schools, where colleges 
received payments in exchange for steering loan volume to particular 
lenders.
  It is time to clean up this mess and bring transparency to the 
system.
  The legislation before us will do just that and help ensure this sort 
of scandal never occurs again.
  Madam Speaker, students and families have been the victims of 
corporate greed, bribery and corruption in the Bush administration.
  Now, it's time to put an end to these scandals and pass real reform.
  I urge all of my colleagues to support this legislation.
  Mr. McKEON. Mr. Speaker, I yield myself such time as I may consume to 
close the debate.
  Mr. Speaker, what our job is here in Washington as legislators is to 
represent the people from our districts, the people from around the 
country. Specifically on the Committee on Education, we have the 
responsibility to protect and encourage those young people who are 
trying to receive an education, both K-12 level and those who want to 
continue their education throughout their lifetime at the higher 
education level.
  We have passed many laws that try to make it easier for people to 
achieve the American Dream through education. Sometimes we have people 
that skirt those laws or take them up to the edge. When we find 
problems, it is our responsibility to address those problems.
  We have about 6,000 schools across the country that participate in 
the Federal financial aid programs. They have financial aid officers 
that work with the students that come into the schools to help them get 
a Pell Grant or get other financial aid that is available, or they help 
them find a loan company that will help them get a loan that is needed 
to achieve their education.
  We have about 3,500 lenders that participate in these loans. Again, 
some of the lenders have crossed the line or gotten too close to the 
line, as with some of the financial aid officers, but we definitely 
don't want to paint all lenders, all schools, all financial aid 
officers, with a broad brush, saying they are all corrupt. Most of 
them, the vast percentage of them, are doing a great job of trying to 
carry out their mission and helping students achieve their goals.
  This piece of legislation will help make that law stronger, to verify 
that those students will get the most help in getting the loans and 
getting the financial aid they need to achieve the American Dream, and 
I am happy to be a part of this, to make it come to pass. I am hopeful 
that the other body will pick up this legislation and move forward with 
it. I encourage all of my colleagues to support this law.
  Mr. Speaker, I thank, again, Chairman Miller for being expeditious on 
this and getting this bill to the floor quickly.
  Mr. Speaker, I yield back the balance of my time.
  Mr. GEORGE MILLER of California. Mr. Speaker, I thank the gentleman.
  Mr. Speaker, I yield 1 minute to the gentleman from Texas (Mr. 
Hinojosa).
  Mr. HINOJOSA. Mr. Speaker, in closing, I want to say that this work 
that has been done by Chairman Miller and Ranking Member Buck McKeon 
has been something that I have really appreciated.
  This is an $85 billion industry, and when you take the for-profit 
groups that are lending money, it exceeds $100 billion. I foresee that, 
with this legislation, we are going to see an increase as a result of 
that. We should be looking at $110 billion being lent, because it will 
be easier and much more acceptable to be able to borrow money at a 
lesser cost to the families.
  Finally, in the area that I come from, were it not for these student 
loans, the Pell Grants and the Perkins Act loans that are available, 
many minority families' children, boys and girls, would not be able to 
go to college.

[[Page H4641]]

  So we are pleased with the leadership of these two gentlemen, and I 
look forward to seeing its passage.
  Mr. GEORGE MILLER of California. Mr. Speaker, I thank the gentleman 
from Texas for his remarks and for his leadership on this. I thank Mr. 
McKeon and Mr. Keller for all of their cooperation, for their 
suggestions and for the introduction of the bill soon after this came 
to light by Mr. McKeon. I think it was very helpful in our discussions 
with Attorney General Andrew Cuomo. I certainly want to thank him for 
his diligence and the speed with which he responded to this 
information.
  Tragically, much of this information has been available for a 
considerable period of time. Tragically, what we now are making against 
the law, the conduct we are now changing almost became the preferred 
way of doing business among many of the colleges and universities and 
the lenders which they utilized on behalf of their students.
  It is just inconceivable that when people understand, and it is 
brought to our attention every day, the decisions that students and 
their families have to make about whether to pursue a college degree, 
the costs that are incurred, the sacrifices that are made by working 
families, by all families, by the students, many of whom then work part 
time and full time to augment the cost of that college, when that 
sacrifice and those determinations and decisions are made by those 
families, to have that process corrupted by some of the largest 
corporations in America, some of the wealthiest corporations in 
America, that they would see somehow a way to skim off, to skim off the 
profits and the costs at the expense of these students and of the 
taxpayers that put up the money.
  The reason we guarantee these loans is to try to drive this money to 
the students and their families at the lowest possible cost so that 
they can afford to go to college; they can afford to take a job and pay 
back the cost of their college. That is the public purpose. Now that 
public purpose has absolutely been prostituted by the Department of 
Education, by many of the lending institutions and by many of the 
colleges and much of the personnel that works for them.
  This legislation is a first step, a bipartisan step to stop those 
practices in their tracks, to get this program right side up for the 
benefit of the families and the students who are borrowing the money. 
To serve notice on the institutions, the lenders, the institutions of 
higher education and the people who work in these programs that this 
will no longer be tolerated.
  Once again, this program has to come to the point where it is again 
serving the families and the students who are making this sacrifice to 
achieve a college education at the lowest possible cost. That is the 
public interest, that is the public purpose, and we will not have that 
corrupted. We will not have that corrupted, either by the public 
agencies or the private agencies that are engaged in this program.
  The next step is to bar those agencies if they continue in this 
practice. That would be a horrible thing to do for those institutions, 
but we will not allow this to continue. And as we consider the Higher 
Education Act, we are going to continue to pursue ways in which we can 
reform this program and make it work for those for whom it was 
designed, the families and the students.
  I want to thank the staff on both sides of the committee that were so 
helpful in understanding the programs and the changes that needed to be 
made, that went through the evidence and responded in this legislation, 
so that the House of Representatives could go on record that we will 
not allow this to happen on our watch.

                              {time}  1100

  Mr. McKEON. Mr. Speaker, I ask unanimous consent that both sides be 
allocated an additional 1\1/2\ minutes in order to allow Mr. Castle, 
the ranking member, who has just arrived, to speak on the bill.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from California?
  There was no objection.
  Mr. McKEON. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from 
Delaware (Mr. Castle).
  (Mr. CASTLE asked and was given permission to revise and extend his 
remarks.)
  Mr. CASTLE. Mr. Speaker, let me thank both Mr. George Miller and Mr. 
McKeon. I am in total agreement with them on this legislation. I also 
would like to thank the staff for their working on this.
  I think it is a shame that we have gone through the last few months 
and all the revelations of the problems in the student loan industry on 
a whole variety of levels. I am not here to attribute blame to anybody 
at this point but to suggest we do have a role in getting involved in 
this and to make a difference. I will submit my prepared statement, but 
I would like to go just a little beyond that.
  I think everyone in America, in terms of being competitive, has to do 
everything we can to educate our young children. Clearly, student loans 
by the individual students and the families need to be taken into 
consideration, but so does the cost of college.
  As we look at the Higher Education Act which Chairman Miller 
referenced, it is vitally important that we make sure that our colleges 
are being closely analyzed in terms of keeping those costs down. The 
Federal Government cannot do it all with respect to grants and loans or 
whatever it may be. Indeed, we need to close the gap between the cost 
of college and what people can afford. Hopefully, we can continue to 
work on this.
  This is a wonderful first step. I hope everyone is supportive of H.R. 
890. I certainly am supportive of it and concur with statements that 
have been made today.
  I rise in support of H.R. 890, the Student Loan Sunshine Act, which 
will return the focus of the financial aid process to serving the needs 
and interests of students. H.R. 890 is the first step in ensuring that 
the federal student aid program is kept on a firm foundation for 
generations to come.
  As Congress moves towards reauthorizing the Higher Education Act, the 
reforms in H.R. 890 are steps in the right direction to ensure the 
financial aid system works for students and colleges alike.
  In addition to this bill, the Committee has also held one 
investigative hearing on findings by New York Attorney General Andrew 
Cuomo on the relationship between student loan lenders and the 
financial aid offices in institutions of higher education. Tomorrow the 
Committee will hold a second in investigative hearing, asking U.S. 
Secretary of Education, Margaret Spellings about alleged lapses in the 
Department's oversight of the federal student loan programs. 
Additionally, Mr. Petri and I have sent a letter to the Congressional 
Research Service (CRS) requesting information from them about the 
private loan industry. By answering some of these questions and by 
passing this legislation today, I am hopeful Congress can work to 
restore confidence in the federal student loan system.
  I urge my colleagues to support H.R. 890, the Student Loan Sunshine 
Act, to help serve the needs and interests of our students and to 
restore confidence in our federal loan system.
  Mr. PETRI. Mr. Speaker, I rise today in support of H.R. 890, the 
bipartisan Student Loan Sunshine Act, as a first step towards 
comprehensive student loan reform. The series of scandals that have 
surfaced over the last month have underscored the need for clear and 
explicit guidance on student lending ethics. These revelations of 
kickbacks, financial aid officer compensation, lavish travel, and aid 
office staffing are just a few of the egregious practices lenders have 
employed to buy access on preferred lender lists and manipulate the 
trust of both students and taxpayers.
  In supporting H.R. 890, however, we must remember that these abuses 
are merely symptoms of a very broken system: the Federal Family 
Education Loan (FFEL) program. The excessive subsidies made to student 
lenders through this archaic loan-delivery system cost taxpayers 
approximately $5 billion more each year than the comparable Direct Loan 
program. Indeed, the Office of Management and Budget, Congressional 
Budget Office, Treasury Department, Government Accountability Office, 
and other economists are all in agreement that the FFEL structure is 
hemorrhaging taxpayer subsidies. While this wasteful spending is 
inexcusable, it is even more appalling that none of these excess 
subsidies filter back down to students in the form of borrower 
benefits, but rather have been used to underwrite these unethical 
practices.
  Let me be very clear, while the Sunshine Act is a positive first step 
towards reform, we must only consider it a stop-gap measure to limit 
further abuse of the FFEL program while we develop a comprehensive, 
structural loan reform. In the coming months, Congress will have 
another opportunity to consider changes to this nation's higher 
education laws. The real test of our resolve will be whether we settle 
for

[[Page H4642]]

yet another Band-Aid on a broken system or if we work to redesign this 
system to ensure that critical tax dollars in federal student loans 
provide the best return on our taxpaying constituents' investment.
  Mr. Speaker, I invite my colleagues to join me not only in supporting 
this bill, but also working towards comprehensive student loan reform. 
Students and taxpayers deserve better, and Congress has the 
responsibility to deliver these critical reforms this year.
  Mr. ANDREWS. Mr. Speaker, I rise in strong support of the Student 
Loan Sunshine Act. This bill helps to ensure that parents and students 
have access to all student loan options available to them in order to 
make the best informed decision.
  Some key improvements include providing students information on all 
federal student aid opportunities through a new ``one-stop'' link on 
the Department of Education website. This will allow students to have 
access to all lenders of their choice, and not feel limited with 
preferred lender list. The bill also requires institutions disclose all 
relationships with lenders and protects students from aggressive 
marketing practices.
  The student loan industry has been under intense scrutiny recently 
and it is our obligation as Members of Congress to promote open and 
honest leadership. I applaud Chairman Miller for developing a strong 
piece of legislation that will help restore trust in the student loan 
industry.
  Access to affordable and quality education is a key element to this 
country's future. As a cosponsor of the Student Loan Sunshine Act, I 
encourage my fellow colleagues to support this bipartisan legislation.
  Mr. CONYERS. Mr. Speaker, I rise today in support of H.R. 890, The 
Student Loan Sunshine Act of 2007. Over the last few decades the costs 
of a postsecondary education in our country has increased 
exponentially. Now, more than ever our nation's students and families 
are relying on student loans to help pay for a college degree and yet, 
thanks in large part to the investigative reporting New York Times, we 
now know that egregious conflicts of interest and corrupt practices 
among lenders, schools, and public officials are undermining the 
student loan programs on which millions of borrowers depend. This is 
unacceptable, and I am pleased that the Education and Labor Chairman 
George Miller has decided to address this situation so promptly.
  The Student Loan Sunshine Act cleans up the student loan industry and 
ensures that students and families will encounter a more trust-worthy 
student aid system in the future by requiring institutions and lenders 
to adopt strict codes of conduct that adhere to specific guidelines, 
banning all gifts, participation on advisory boards, and revenue-
sharing agreements between lenders and schools, mandating institutions 
disclose all relationships with lenders, only allowing ``preferred 
lender lists'' on campuses with strict assurances that the list was 
created with the students' best interest in mind, ensuring that 
students have access to all lenders of their choice (including those 
not on the preferred lender lists), prohibiting staffing of school 
financial aid offices.
  We need to pass this legislation here and now to send a message to 
all stock holders that Congress and the American public will not abide 
abusive lending practices and that we are entitled to transparency in 
student loan programs.
  Mr. VAN HOLLEN. Mr. Speaker, in a time when most students graduate 
with at least $20,000 in debt, it is more important than ever that 
students can find loans with low interest rates that are easy to pay 
back. In the best case, students can get federal financial aid. 
However, more and more students have maxed out that aid and are turning 
to the private market. Many schools recommend lenders to help students 
and their families find loans.
  Now, most schools do work in the best interest of their students, and 
choose preferred lenders based on the benefits they can give students. 
But, as we have seen, some unscrupulous lenders have schemed with 
certain unscrupulous staff of college loan offices to serve their own 
special interests rather than the interests of students and their 
families.
  What is worse, the Department of Education knew about these cozy 
relationships between student loan officials and lenders and did 
nothing about it. This is indicative of the lack of oversight that has 
persisted at the Department of Education for the last six years. Some 
of us in Congress, a few years ago, worked to close a loophole in the 
federal student loan program that was costing taxpayers millions of 
dollars. We had to pass a law to force the Department of Education to 
act--they had refused to issue emergency regulations to stop the 
subsidy and save money for taxpayers and students.
  And now, again, the Department of Education, when faced with a clear 
conflict of interest between lenders and schools, has failed to respond 
adequately. Congress must step in to make the rules clear.
  This bill does just that. It clarifies appropriate conduct for 
schools. It encourages private loans to be competitive with federal 
loans. It makes students more aware of their options by making the 
student loan market less confusing and more transparent.
  Perhaps most importantly, this bill will restore trust between 
students and their colleges. Students need to be able to trust that 
their school officials are giving them the best advice in the confusing 
world of student loans. The provisions of this bill, by requiring 
schools to disclose exactly how their preferred lenders are chosen, 
will reassure students and parents that schools are looking out for 
their best interests.
  This bill will help students and parents get the best deal for their 
money. I encourage my colleagues to vote yes on the Student Loan 
Sunshine Act, and put in place a system that looks after students' 
interests, and is not plagued by special interests.
  Mr. HOLT. Mr. Speaker, I rise in support of H.R. 890, the Student 
Loan Sunshine Act and I thank Chairman George Miller for bringing this 
bill to the floor.
  With the rising cost of college, students and families are more 
reliant then ever on student loans to pay for college. At the same 
time, it is becoming more and more important for these students to earn 
a college degree to compete for good jobs. U.S. Census data show that, 
on average, every year of post-secondary education raises a worker's 
annual earnings, helping the worker to provide for his family as well 
as to give back to his community. Post-secondary education is becoming 
more and more important--according to the Bureau of Labor Statistics, 
the percentage of jobs requiring post-secondary education will rise 
from 29% in 2000 to 42% by the end of the decade.
  Ongoing investigations into the student loan industry have revealed 
that egregious conflicts of interest and corrupt practices among 
lenders, schools, and public officials are undermining the student loan 
programs that millions of borrowers have come to depend on. Just 
yesterday Theresa Shaw, chief operating officer of the office of 
federal student aid, resigned from the Department of Education. My own 
State of New Jersey now has the State Attorney General looking into 
evidence of agreements between the New Jersey Higher Education Student 
Assistance Authority and lenders that show lenders paid the agency to 
market their products to schools.
  I am pleased that this bill bans all gifts, participation on advisory 
boards, and risk-sharing agreements between lenders and schools and 
requires institutions to disclose all relationships with lenders. The 
bill ensures that students have access to all lenders of their choice, 
including those not on the ``Preferred Lender Lists.'' The bill bans 
staffing of school financial aid offices by lenders, and ensures that 
schools process all loans, from any lender, and do not steer students 
away from their first choice. I am also pleased that the bill requires 
lenders offering private loans to first inform students of their 
federal borrowing options, so that the student can get the better 
federal interest rates.
  Too often, when students leave college they are not informed of all 
their repayment options. The bill requires that all exit counseling is 
provided with the school's involvement and that they inform students of 
all of their repayment options.
  Students deserve clear, straight-forward information and the bill 
instills enforceable marketing protections, including disclosures and 
notifications to students and institutions by lenders offering private 
loans. This bill gives a student the full picture by requiring lenders 
and institutions to disclose fully and prominently the terms, 
conditions, and incentives for all loans.
  Again, I look forward to the results of the investigation of the 
State of New Jersey Attorney General and I thank Chairman Miller for 
taking these steps to disclose all information about the student loan 
industry, colleges, and public officials. I ask my colleagues to 
support this important bill.
  Mr. GEORGE MILLER of California. Mr. Speaker, I urge the House to 
pass H.R. 890, as amended, and I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from California (Mr. George Miller) that the House suspend 
the rules and pass the bill, H.R. 890, as amended.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds 
being in the affirmative, the ayes have it.
  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 question will 
be postponed.

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