[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
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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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