[Congressional Record Volume 154, Number 61 (Thursday, April 17, 2008)]
[House]
[Pages H2456-H2466]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
ENSURING CONTINUED ACCESS TO STUDENT LOANS ACT OF 2008
The SPEAKER pro tempore. Pursuant to House Resolution 1107 and rule
XVIII, the Chair declares the House in the Committee of the Whole House
on the State of the Union for the further consideration of the bill,
H.R. 5715.
{time} 1100
In the Committee of the Whole
Accordingly, the House resolved itself into the Committee of the
Whole House on the State of the Union for the further consideration of
the bill (H.R. 5715) to ensure continued availability of access to the
Federal student loan program for students and families, with Mrs.
Tauscher (Acting Chairman) in the chair.
The Clerk read the title of the bill.
The Acting CHAIRMAN. When the Committee of the Whole rose on
Wednesday, April 16, 2008, 34 minutes remained in general debate.
The gentleman from California (Mr. Miller) has 15\1/2\ minutes
remaining and the gentleman from California (Mr. McKeon) has 18\1/2\
minutes remaining.
Mr. GEORGE MILLER of California. Madam Chairman, I yield myself such
time as I may consume.
Madam Chairman, Members of the House, today we continue the
consideration of H.R. 5715, the Ensuring Continued Access to Student
Loans Act of 2008. This is legislation that was reported from the
Committee on Education and Labor with unanimous bipartisan support.
Once again today, I want to thank my colleagues on the committee on
both sides of the aisle and the staff on both sides of the committee
for working in a manner which allowed us to report this bill in very
short order to the House for its consideration, and on working with the
Department of Education, the Secretary of Education, Margaret
Spellings, for her cooperation in helping us with this legislation so
that we can assure the parents, families, and students of this country
that there will be no interruption in their access to student loans.
As the lending season starts to progress now, as students are getting
their letters of acceptance, thinking about the next semesters of
education and next year's education, as that lending season comes into
its fullness, we want to make sure that there is no disruption.
We are concerned about a disruption because of the general disruption
that is taking place in the Nation's credit markets, and specifically,
concern about whether or not there will be a spillover onto the student
loan markets so that students will have difficulty finding those loans.
We have worked with the Department of Education, we have worked with
the administration, we have worked with the Republican members of the
committee and our own caucus to devise a system of relief that is
available to the Secretary and to the administration in the event that
that should happen. And really what we're doing is three things: One,
we're making sure that the existing law and the existing program for
such an emergency, the Lender of Last Resort program, is functioning,
that agreements are reached between the Secretary of Education and the
Secretary of Treasury, and we've been told by the Secretary of
Education that she has informed the members of the committee that that
has been done, that the Secretary meet with the guarantee agencies that
might stand in the stead of those lenders that cannot make those loans
to make sure that there is a smooth transition between them and the
universities and colleges, and that that program is in place.
Also, that schools are aware that they can apply to qualify for the
Direct Lending program. Many colleges and universities use that today.
They may want to consider that so, again, there is smooth transition
should the private lending market not be able to come forward with the
student loans, they could direct their students to either of those two
programs.
And, finally, to try and help the private sector credit markets for
student loans, as this bill does, to give standby
[[Page H2457]]
authority to the Secretary to purchase those government loans from the
traditional lenders in the student loan field so that we might develop
some liquidity in that market so that they can then take the money they
receive from the Secretary and make a new tranche of student loans. If
she purchases those loans, that money could only be used to provide a
new set of student loans for the students for the coming year.
And we also raised the loan limit for students, for undergraduates,
because we understand that the private student loan market is in very
rough shape, and there are some students who use private loans to fill
a small gap between the total cost of their education and what they
were able to borrow. We think by raising the limit, we will be able to
help most of those students in that situation.
So this is an important piece of legislation. It's legislation that
we look to be acted upon in the Senate in a very timely fashion and
then to be sent to the President, we believe, for his signature. And
then we will have completed a series of standby authorities and a
series of processes that we should be able to assure families and
students that there will be no major interruption in the student
lending for the remainder of this year and next year.
With that, I will reserve the balance of my time.
Mr. McKEON. Madam Chairman, I yield myself such time as I may
consume.
Today we are continuing the debate on H.R. 5715, the Ensuring
Continued Access to Student Loans Act of 2008. This bill is a first
step to prevent a crisis before it happens in the student loan program,
and its consideration has come not a minute too soon. Peak lending
season begins in July, and we cannot, we must not, wait until a student
is denied a loan to put mechanisms in place to deal with the turmoil in
the student loan market.
To date, 60 lenders have suspended their participation in all or part
of the FFEL program. This includes 10 nonprofit State loan agencies
affecting students in Pennsylvania, Texas, Colorado, Iowa, Indiana,
Massachusetts, Michigan, Missouri, New Hampshire and Minnesota. These
are not minor players exiting the program. Nine out of the top 10
consolidation lenders have stopped offering these loans, while 20 out
of the top 100 originators have stopped making Stafford and PLUS loans.
These 60 lenders account for 13 percent of the total Stafford and PLUS
loan volume and 76 percent of total consolidation loan volume.
In fiscal year 2006, these lenders originated more than $6.5 billion
in Stafford and PLUS loans to more than 800,000 students and parents,
and more than $55 billion in consolidation loans to more than 1.8
million borrowers.
The bill before us includes necessary reforms to ensure the
Department of Education can respond if students have access problems as
lending season gets underway. First, it will allow students to receive
additional financing that will help them stay in school if they are
denied private, nonfederal loans. Second, the bill clarifies aspects of
the Lender of Last Resort program, easing participation for students
and schools and ensuring funds will be available should they become
necessary. Third, the bill ensures that lenders have the authority to
provide PLUS loans to struggling parents who are facing difficulties
with their home mortgage. And, fourth, the bill grants new flexibility
for parents with a new optional grace period that permits parents to
defer PLUS loan payments until after the children graduate.
Finally, the bill authorizes the Department of Education to invest in
or agree to the future purchase of outstanding loans which could free
up capital and allow lenders to make new loans in the upcoming school
year.
I want to thank the chairman for moving very rapidly on this
situation. That's not our modus operandi around here; generally we wait
until we're in the middle of a crisis to fix this. I hope that I'm
wrong in thinking that there may be a crisis coming, but I think it is
very appropriate to take these positive steps to ease or prevent a
problem that could arise very shortly.
I again thank the chairman for his efforts. He has not been well this
week, but you wouldn't notice it. He shows up at every meeting, and he
has worked very hard. I hope he takes some time over the weekend to get
some rest and gets feeling better for next week.
I strongly support this bill, and I encourage my colleagues to vote
for it.
Madam Chairman, I reserve the balance of my time.
Mr. GEORGE MILLER of California. If I might, I have one additional
speaker, but the speaker is on his way to the floor. If you want to go
ahead, then we will have that speaker, and I think we will yield back
our time.
Mr. McKEON. Madam Chairman, I am happy to yield 3 minutes at this
time to the gentleman from Pennsylvania, ranking member on our
Subcommittee for Healthy Families, Mr. Platts.
Mr. PLATTS. I thank the ranking member for yielding me the time.
I rise in support of H.R. 5715, the Ensuring Access to Student Loans
Act. While not a complete solution to the current credit crunch that
exists in the student loan market, this bill is a very important and
strong starting point to ensure that students can continue to obtain
affordable loans for their education.
I am especially pleased that the manager's amendment included a
provision that I was planning to offer as a stand-alone amendment to
the underlying bill. Specifically, this provision will permit the
Secretary of Education to enter into forward purchasing agreements with
student loan lenders when purchasing loans through the newly
established secondary market. This contractual agreement will provide
the necessary confidence for lenders to not only participate in the
market, but to continue to originate loans for students.
Some lenders, such as the Pennsylvania Higher Education Assistance
Agency, PHEAA, in my home State, have recently announced that they will
not be originating additional loans due to the unstable market
conditions. This could result in difficulties for students in
Pennsylvania, and elsewhere, in obtaining the loans they need.
It is imperative that Secretary Spellings at the Department of
Education continue to work with Congress, as well as Secretary Paulson
at the Department of Treasury and Chairman Bernanke at the Federal
Reserve Bank, to provide access to capital sources for use in
originating and purchasing loans.
Last month, I joined with the majority of my colleagues in the
Pennsylvania delegation in sending a letter to Secretaries Spellings
and Paulson and Chairman Bernanke requesting that they adopt both a
short-term strategy to inject revenue into the student loan market and
a long-term strategy to prevent future capital market disruptions.
While H.R. 5715 is a very important step in the right direction, the
actions of Secretaries Spellings and Paulson and Chairman Bernanke will
continue to be critically important to getting the student loan market
fully back on track.
I certainly commend Chairman Miller and Ranking Member McKeon for
bringing forward this bipartisan piece of legislation--and, as the
ranking member said, in such a quick fashion--the committee leadership
and staff in getting this bill to the House floor aimed at providing
relief to both students and lenders.
Again, I also thank the chairman for including language in his
manager's amendment providing for forward purchasing agreements.
Allowing these agreements with the Department of Education will help to
stabilize market conditions and thereby encourage lenders to originate
more loans.
I strongly support this legislation and encourage a ``yes'' vote.
Mr. McKEON. Madam Chairman, I am happy to yield 3 minutes to the
gentleman from Connecticut (Mr. Shays).
Mr. SHAYS. I thank the gentleman for yielding. I appreciate the work
on both sides of the aisle.
Madam Chairman, I rise today in support of H.R. 5715, the Ensuring
Continued Access to Student Loans Act, because it is an important
legislative step to addressing the liquidity shortage in the student
loan market.
I would like to thank Chairman Miller, Ranking Member McKeon and the
Education and Labor Committee in general for bringing this legislation
to the floor today to ensure continued access to student loans in this
time of financial strain.
[[Page H2458]]
This isn't a Democratic or Republican issue, this is an American
issue, and I'm grateful we were able to work together to take this
first step to protect our Nation's students.
The fallout of the subprime market and subsequent weakening of the
credit market has destabilized what many consider to be sound
investments, most notably, student loans. Investors are not hungry to
invest, funds have dried up, and lenders have been unable to secure the
capital they need to make new loans. All this in the aftermath of
reductions in lender subsidies to the Federal Family Education Loan
Program that were made in the past 3 years and have created the perfect
storm in the student loan market. We should re-examine the effect of
these cuts and affect swiftly if we have an over-cut in any area.
What's more, lenders have backed out of the program before most
students have even gone to secure their loans for next year.
We see the potential for a problem ahead, and I believe it is our job
in Congress to find solutions and alternatives now, before we see a
repeat of the subprime mortgage market meltdown.
When we considered the Higher Education Reauthorization bill back in
February, I offered an amendment expressing a Sense of Congress that
the Departments of Education and Treasury explore options within
Federal financing institutions to ensure liquidity for the program
providers. While I am pleased that Chairman Miller and Ranking Member
McKeon have included this language in the bill before us today, I
wonder if we would be in this situation had we worked to address this
situation back in February.
Lenders who have exited the FFEL program account for 13 percent of
total student loan volume in the FFEL program. What's worse, we have
not entered the period of time when students will call their individual
lenders for next year's loans. We need to act quickly to prevent
students from being denied loans.
While I believe this bill is a good first step, we need to work with
the Treasury Department to open access to Federal financing
institutions like the Federal Home Loan Bank or the Federal Financing
Bank.
Ultimately, this is a liquidity issue. While I am pleased the bill
provides additional Federal assistance to students and their families,
I am concerned that we are not getting to the heart of the matter.
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It is alarming to think in this period of economic uncertainty we
would be willing to provide anything less than the highest quality
education to citizens of our Nation. Access to higher education is
critical to maintaining our global competitiveness.
And, again, let me thank both the chairman and ranking member.
Mr. McKEON. Madam Chairman, I yield myself the balance of my time.
The Acting CHAIRMAN. The gentleman from California is recognized for
9\1/2\ minutes.
Mr. McKEON. Our economy is struggling, families are dealing with a
higher cost of living, rising fuel costs, a struggling mortgage market,
and the threat of higher taxes. The cost of a college education
continues to rise, only now students and families are wondering whether
they'll be able to get the loans they need to pay their tuition bills.
Like most challenges to our economy, there's no easy answer to the
difficulties in our student loan programs. We will need a combination
of actions, maybe some legislatively, others through regulation, that
will increase liquidity and restore confidence among investors and
consumers.
This bill is a first step and one that deserves bipartisan support.
It signals our commitment to a strong Federal family education loan
program and should help ease the minds of students and families, and it
does these things without a single cost to the taxpayer.
I want to again thank Chairman Miller for his leadership and
bipartisan cooperation on this legislation. I would also like to
recognize Representatives Ruben Hinojosa and Ric Keller, the chairman
and senior Republican on the Higher Education Subcommittee, for their
role in making this legislation a reality.
The staff deserves special recognition for their efforts to bring
this bill to the floor so quickly. On my staff I would like to thank
Amy Jones along with Susan Ross and Sally Stroup; on Chairman Miller's
staff, Gaby Gomez, Julie Radocchia, and Jeff Appel.
Madam Chairman, this bill is a positive first step. It's good for
students and families, it's good for taxpayers, and it's good for our
economy. I urge my colleagues to vote ``yes.''
Madam Chairman, I yield back the balance of my time.
Mr. GEORGE MILLER of California. Madam Chairman, I want to thank Mr.
McKeon for mentioning my staff and to Julie Radocchia and also that I
failed to mention her birthday yesterday when I recognized her service.
Mr. BACA. Madam Chairman, I rise today to voice my strong support for
H.R. 5715, the Ensuring Student Access to Federal Student Loans Act.
Access to education and equality of opportunity are rights that every
American deserves.
H.R. 5715 helps to protect these rights--by ensuring the turmoil in
the U.S. financial markets does not keep students from accessing the
federal loans they need to pay for college.
Because of the current stress in the U.S. credit markets, these
protections are necessary now more than ever.
This responsible bill increases the loan limits on federal college
loans by $2,000 for undergraduate students, and also increases the
total loan limits available to students over the course of their
education.
H.R. 5715 also gives parents more time to begin paying off their
federal PLUS loans; and helps struggling home owners by making sure
that short term delinquencies in mortgage payments don't prohibit
eligible parents from taking federal loans; 225 thousand students in
the state of California alone use need-based student loans.
It is critical that Congress takes every step necessary to ensure the
credit crunch does not prevent even one of them from receiving the
education they deserve.
I urge my colleagues to help keep America the land of opportunity,
and to cast a vote in favor of H.R. 5715.
Mr. TIAHRT. Madam Chairman, I rise today to offer my support for H.R.
5715, the Ensuring Continued Access to Student Loans Act. As many of my
colleagues are, no doubt, aware, the rupture of the housing bubble in
this nation has had a ripple effect across our economy. The student
loan industry has not been immune to these economic difficulties. In
fact, in recent months, 57 providers of student loans have announced
that they will no longer offer loans to students. This legislation is a
good effort on the part of Congress to address this situation.
We should delude ourselves by believing that this legislation is a
panacea, bringing a complete solution to the circumstances we find
ourselves in today. By and large, the lending market will need to take
actions of its own to right the tottering ship. These efforts are
things that Congress is not, and should not be, in the business of
mandating. But this legislation does take steps to protect students and
their families by providing assurances that the opportunities to
finance a college education are not jeopardized while the lending
market is in flux.
Presently, experts in the field are unsure that the situation is, in
fact, a ``crisis,'' pointing to a number of additional factors that may
have contributed to the narrowing of the market. We will not know for
several more months, when requests for student loans reach their peak,
just how serious a problem we are facing. That is exactly the reason
this legislation is the correct approach. It takes preventive steps to
ensure that funding is available to students and their parents, if a
crisis does arise. It does not create new mandates, but instead gives
the Secretary of Education the authority to address potential problems.
Ensuring access to affordable student loans is of great importance to
this nation, to our economy, and to our millions of students in
college. I appreciate the efforts of Mr. McKeon and Mr. Miller to bring
this legislation to the floor in such a timely manner, and hope that
this bill will be enough to stave off larger problems down the road.
Mr. COURTNEY. Madam Chairman, I want to commend Chairman Miller for
getting out ahead of the student lending issue before it becomes a
full-fledged crisis. In March, the Education and Labor Committee heard
testimony from the Secretary of Education, Margaret Spellings, and we
urged her to take steps then to ensure student lending contingency
plans were in place in the event of further troubles. Frankly, I was
disappointed to learn that she and her team were only ``monitoring the
situation.''
It is imperative that students have uninterrupted access to student
loans in the event that the mortgage crisis and credit crunch further
ripple through the economy. Just yesterday, Citibank's student lending
division announced it was going to stop lending at many
[[Page H2459]]
higher education institutions, though they wouldn't name which ones.
This is troubling news since Citibank is the second largest originator
of federal student loans.
I met with the Connecticut Commissioner of Higher Education and the
Director of Financial Aid at the University of Connecticut last month
and let me tell you--they are taking this issue seriously. Financial
Aid offices across the state are communicating to students and families
to finalize their education financing now. I have also personally taken
part in getting the word out to my constituents as well.
Thankfully, Connecticut students also have backup from the state's
own loan agency, the Connecticut Higher Education Supplemental Loan
Authority, with $31 million to lend.
Right now, we don't know how deep the effects will be, but it is
prudent that students and their parents are given some relief now. This
bill will steer borrowers away from costlier private loans and give
parents more time to pay off PLUS loans. And it is crucial that
Secretary Spellings has the authority now to advance federal funds if
necessary.
The federal government rushed in to bail out Bear Stearns. It is only
right that we make sure that the federal government is ready to assist
millions of students and families if the need arises.
Mr. CARNEY. Madam Chairman, I rise today in support of H.R. 5715, the
``Ensuring Continued Access to Student Loans Act of 2008.''
This legislation will go a long way in helping to ensure the
continued availability of Federal student loans. But it is only a first
step and more needs to be done so that any student anywhere in America
can attend the college of his or her choice.
Today, 80 percent of all Federal student loans are made through the
Federal Family Education Loan Program--commonly known as FFELP.
According to the U.S. Department of Education, 6.8 million college
students and their families will borrow nearly $60 billion from State,
non-profit and private lenders who participate in the Federal student
loan program.
Ninety-five percent of all student loans made in the Commonwealth of
Pennsylvania and nearly all student loans made at schools in my
district are made through the FFEL program. Unfortunately, earlier this
year, the Pennsylvania Higher Education Assistance Agency--which was
the second largest provider of Federal student loans in Pennsylvania
last year--was forced to stop making Federal student loans. PHEAA's
exit, along with others, from Pennsylvania's student loan market, means
that nearly one-third of all borrowers in the Commonwealth must find
new lenders for the upcoming academic year.
In responding to the student loan credit crunch, the Administration
has said that there are 2,000 lenders. That was true, but over the past
few weeks, 52 lenders, including 23 of the top 100 lenders have simply
stopped making Federal student loans. This represents over 13 percent
of all FFELP loans made last year.
Nineteen lenders have stopped making private education loans.
In just the days since the Education and Labor Committee approved
this bill and sent it to the floor, five major participants in the FFEL
program have either stopped making Federal student loans altogether or
have announced plans to dramatically scale back their ability to offer
Federal student loans.
In responding to the student loan credit crunch, some have said, we
can make the State guaranty agencies ``Lenders of Last Resort,'' but
this system has never been implemented, let alone tested.
Others have said that if lenders stop making loans, students and
schools can switch to Direct Lending. Yet Secretary Spellings recently
testified that Direct Lending can only accommodate about one-third of
the FFELP loan volume. If that is true, what will happen to the 4.5
million students who may find themselves unable to get a Federal
student loan?
And still others have said that no students have been denied college
loans yet so there is no need to act.
I think most of my colleagues agree that the best time to prepare for
a hurricane is before the storm hits.
That is why the stated purpose of H.R. 5715 is to ensure continued,
uninterrupted access to Federal student loans. One of its provisions
would authorize the Secretary of Education, in consultation with the
Treasury, to purchase student loans if there is not enough loan capital
to meet the needs of students and their families.
While I am pleased that the manager's amendment includes a provision
that will provide borrowers with a continuity of loan servicers, and
thereby keep default rates down, I am concerned that the provision
authorizing the Secretary to purchase loans does not provide enough
information or certainty to the marketplace to help increase access to
college. Without this information, lenders may be financially unable to
make new loans to new students this fall.
During the consideration of this legislation by the Rules Committee,
I offered an amendment that, had it been approved, would have defined
the terms under which the Secretary of Education could exercise her
temporary authority to both purchase student loans and maintain a
continuity of servicing in order to minimize any disruption for
students and schools.
As this bill makes it way through the legislative process I hope that
we will incorporate this language to define the terms under which the
Secretary can exercise her temporary authority to purchase student
loans more clearly than what is before us today.
Madam Chairman, I am supporting this important legislation today, but
our work is not done. While we may not be in a student loan crisis
today and we certainly do not want to be alarmist, the responsible
thing for Congress to do is to give the Administration all of the tools
necessary to head off a student loan crisis. If I am wrong about the
direction of the student loan market, and we incorporate my amendment,
we will have a very strong back-up plan for a rainy day. If I am right
and we do nothing, millions of students could be unable to go to
college.
Mr. GENE GREEN of Texas. Madam Chairman, I rise today in support of
H.R. 5715, The Ensuring Continued Access to Student Loans Act of 2008.
I would also like to thank Chairman Miller of the Education and Labor
Committee and Chairman Hinojosa of the Subcommittee on Higher
Education, Lifelong Learning and Competitiveness for their work on this
important piece of legislation.
Getting a college education has never been more important, and this
bill will help ensure that students will still have access to the
Federal loans they need to pay for college in the coming months.
In recent months, uncertainty in the U.S. credit markets has made it
difficult for some lenders in the federally guaranteed student loan
program to secure the capital needed to finance college loans. Because
of this, some lenders have scaled back their lending activity.
While no student or college has reported any problems accessing
Federal student aid to date, it is important that the Federal
Government take steps to ensure that students will continue to have
access to funds regardless of what happens in the U.S. credit markets.
A viable Federal Family Education Loan Program is extremely important
in my home state of Texas. The FFELP participants provide nearly two-
thirds of the student financial aid awarded annually to Texas
postsecondary education students and parents contrasted to only 56
percent nationally.
Our students can now breathe a sigh of relief knowing that there will
be liquidity and continued, uninterrupted access to Federal loans
thanks to this bill.
Ms. JACKSON-LEE of Texas. Madam Chairman, I rise today in support of
H.R. 5715, ``Ensuring Continued Access to Student Loans Act of 2008'',
introduced by Representative George Miller of California. I want to
thank the Committee on Education and Labor for its efforts in this
important area.
Every generation sets out to improve upon the previous generation. We
teach how children that if they focus, are responsible, and work hard
they can be anything. Yet we have provided a false truth for
the majority of our children. Rising tuitions in higher education even
at our community colleges are keeping a lot of our youth from attending
college. For those that are able to attend, they are burdened by
extensive loans just to buy books, attend class, and maintain housing.
Families are sending their children to school, trying to qualify for
parent loans and wondering how they are going to make the payments when
they are struggling to pay their mortgage and facing their own issues
with possible unemployment.
In my home State of Texas, families are struggling to assist children
with their education while they face an unemployment rate of 4.3
percent across the State. As of the end of last year, Texas was ranked
as having the 20th highest unemployment rate (out of the 50 States).
And we are not alone as States grapple with unemployment and a falling
housing market.
H.R. 5715, Ensuring Continued Access to Student Loans Act, provides
much needed support to our families in a time when they most need it by
specifically addressing the needs of parents, students, and even
lenders. The Student loans Act would:
Increase unsubsidized loan limits for students: This bill will
increase unsubsidized loan limits by $2,000 for each year of
undergraduate and graduate school. It also increases the aggregate loan
limits to $31,000 for dependent undergraduates and $57,500 for
independent undergraduate students.
Delayed repayment of parent PLUS loans: Currently PLUS loan
borrowers--parents--go into repayment 60 days after disbursement of the
loan. This bill would give families an option
[[Page H2460]]
of not entering repayment for up to 6 months after a student leaves
school.
PLUS loan eligibility for struggling home-owners: Under current law,
parents with an adverse credit history are ineligible to receive a
parent PLUS loan, except under extenuating circumstances. In light of
the current housing market, the bill temporarily qualifies up to 180-
day delinquency on home mortgages as an extenuating circumstance,
therefore making it more possible for parents struggling with the
current housing market to secure loans for their children.
Lender of Last Resort flexibility: The bill makes clear in statute
that the Secretary of Education has the mandatory authority to advance
Federal funds to Guaranty Agencies in the case that they do not have
sufficient capital. Further, the bill allows a Guaranty Agency to
designate a school (rather than an individual student) as a ``lender of
last resort school,'' in accordance with guidelines set by the
Secretary.
Authority for the Secretary of Education to purchase FFEL loan
assets: The bill gives the Secretary the temporary authority, upon a
determination that there is inadequate availability to meet demand for
loans, to purchase loans from FFEL lenders. Such purchases could only
be made in the case they are revenue-neutral or beneficial to the
Federal Government.
Federal Institutions' participation: The bill includes a Sense of the
Congress that the Federal Financial Institutions and entities
(including the Federal Financing Bank, the Federal Home Loan Banks, and
the Federal Reserve) should consider using, in consultation with the
Secretaries of Education and the Treasury, available authorities, if
needed, to assist in ensuring continued student loan access.
I urge my colleagues to vote for H.R. 5715, Ensuring Continued Access
to Student Loans Act. Let's support education by allowing for greater
flexibility, eligibility, and participation for students and their
families.
Mr. KIND. Madam Chairman, I rise today in support of the Ensuring
Continued Access to Student Loans Act of 2008, a bill to continue the
promise Congress made in 1965 to provide all Americans, regardless of
culture or socioeconomic status, greater opportunities to further their
education. This bill recognizes the shared benefits to both individual
Americans and to the country as a whole of ensuring future generations
have the tools necessary to be successful in a vastly competitive 21st
century workforce.
The opportunity for children to attend institutions of higher
education is essential in preparing our future leaders. While the
number of students with the academic knowledge, talent, and desire to
attend and succeed in college has substantially increased over time,
the necessary financial assistance has regrettably not kept pace. We
must reverse this trend and uphold the Federal Government's commitment
to America's schools and to all of our children.
The recent instability in financial markets has hurt more than just
homeowners, and many individuals and their families are finding it
difficult to secure student loans to attend college. The ensuring
Continued Access to Student Loans Act assists future and current
students by increasing unsubsidized loan limits for undergraduate and
graduate students, giving parent borrowers more time before they begin
paying off their Federal Plus loans and encouraging Federal financial
institutions' participation in ensuring continued student loan access.
As a former member of the Education and Labor Committee, a
representative of 12 institutions of higher education located in the
Third Congressional District of Wisconsin, and a father of 2 school-
aged boys, I recognize the importance of increased access to post-
secondary education and ensuring that everyone who wishes to attend
college can afford to do so. The ensuring Continued Access to Student
Loans Act is a step in the right direction, and I encourage my
colleagues to join me in supporting this important piece of
legislation.
Ms. WOOLSEY. Madam Chairman, I rise today in support of H.R. 5715,
the Ensuring Continued Access to Student Loans Act of 2008. Everyone
deserves access to the best possible opportunities, which include a
college education. No student should be denied a college education
because he or she can't afford it. That's why we must continue to find
ways to increase student access to financial aid to ensure that
students and their families have every possible opportunity to acquire
a college education.
We can't let the current credit crisis limit any student's
opportunities to receive a college education. This bill would give the
Secretary of Education the tools to help schools in need find a lender
and give students access to the money they need to attend school. To
keep America competitive in the global market, we must continue to
ensure that every student receives access to the best possible college
education.
This bill serves as a preventative measure and goes a long way
towards averting any possible crisis in July or August when our
Nation's students and their families are looking for ways to pay for
the next school year. I urge my colleagues to support H.R. 5715.
Mr. GEORGE MILLER of California. Madam Chairman, I yield back the
balance of my time.
The Acting CHAIRMAN. All time for general debate has expired.
Pursuant to the rule, the amendment printed in part A of House Report
110-590 is adopted and the bill, as amended, shall be considered as an
original bill for the purpose of further amendment under the 5-minute
rule and shall be considered read.
The text of the bill, as amended, is as follows:
H.R. 5715
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This title may be cited as the ``Ensuring Continued Access
to Student Loans Act of 2008''.
SEC. 2. INCREASING UNSUBSIDIZED STAFFORD LOAN LIMITS FOR
UNDERGRADUATE AND GRADUATE STUDENTS.
(a) Amendments.--Subsection (d) of section 428H of the
Higher Education Act of 1965 (20 U.S.C. 1078-8(d)) is amended
to read as follows:
``(d) Loan Limits.--
``(1) In general.--Except as provided in paragraphs (2),
(3), and (4), the annual and aggregate limits for loans under
this section shall be the same as those established under
section 428(b)(1), less any amount received by such student
pursuant to the subsidized loan program established under
section 428.
``(2) Limits for graduate and professional students.--
``(A) Annual limits.--The maximum annual amount of loans
under this section a graduate or professional student may
borrow in any academic year (as defined in section 481(a)(2))
or its equivalent shall be the amount determined under
paragraph (1), plus--
``(i) in the case of such a student who is a graduate or
professional student attending an eligible institution,
$14,000; and
``(ii) in the case of a graduate student enrolled in
coursework specified in sections 484(b)(3)(B) and
484(b)(4)(B), $7,000;
except in cases where the Secretary determines, that a higher
amount is warranted in order to carry out the purpose of this
part with respect to students engaged in specialized training
requiring exceptionally high costs of education, but the
annual insurable limit per student shall not be deemed to be
exceeded by a line of credit under which actual payments by
the lender to the borrower will not be made in any years in
excess of the annual limit.
``(B) Aggregate limit.--The maximum aggregate amount of
loans under this section a student described in subparagraph
(A) may borrow shall be the amount described in paragraph
(1), adjusted to reflect the increased annual limits
described in subparagraph (A), as prescribed by the Secretary
by regulation.
``(3) Limits for undergraduate dependent students.--
``(A) Annual limits.--The maximum annual amount of loans
under this section an undergraduate dependent student (except
an undergraduate dependent student whose parents are unable
to borrow under section 428B or the Federal Direct PLUS Loan
Program) may borrow in any academic year (as defined in
section 481(a)(2)) or its equivalent shall be the sum of the
amount determined under paragraph (1), plus $2,000.
``(B) Aggregate limits.--The maximum aggregate amount of
loans under this section a student described in subparagraph
(A) may borrow shall be $31,000.
``(4) Limits for undergraduate independent students.--
``(A) Annual limits.--The maximum annual amount of loans
under this section an undergraduate independent student, or
an undergraduate dependent student whose parents are unable
to borrow under section 428B or the Federal Direct PLUS Loan
Program, may borrow in any academic year (as defined in
section 481(a)(2)) or its equivalent shall be the sum of the
amount determined under paragraph (1), plus--
``(i) in the case of such a student attending an eligible
institution who has not completed such student's first 2
years of undergraduate study--
``(I) $6,000, if such student is enrolled in a program
whose length is at least one academic year in length; or
``(II) if such student is enrolled in a program of
undergraduate education which is less than one academic year,
the maximum annual loan amount that such student may receive
may not exceed the amount that bears the same ratio to the
amount specified in clause (i) as the length of such program
measured in semester, trimester, quarter, or clock hours
bears to one academic year;
``(ii) in the case of such a student at an eligible
institution who has successfully completed such first and
second years but has not successfully completed the remainder
of a program of undergraduate education--
``(I) $7,000; or
``(II) if such student is enrolled in a program of
undergraduate education, the remainder of which is less than
one academic
[[Page H2461]]
year, the maximum annual loan amount that such student may
receive may not exceed the amount that bears the same ratio
to the amount specified in subclause (I) as such remainder
measured in semester, trimester, quarter, or clock hours
bears to one academic year; and
``(iii) in the case of such a student enrolled in
coursework specified in sections 484(b)(3)(B) and
484(b)(4)(B), $6,000 for coursework necessary for enrollment
in an undergraduate degree or certificate program.
``(B) Aggregate limits.--The maximum aggregate amount of
loans under this section a student described in subparagraph
(A) may borrow shall be $57,500.
``(5) Capitalized interest.--Interest capitalized shall not
be deemed to exceed a maximum aggregate amount determined
under subparagraph (B) of paragraph (2), (3), or (4).''.
(b) Effective Date.--The amendments made by this section
shall be effective for loans issued on or after July 1, 2008.
SEC. 3. GRACE PERIOD FOR PARENT PLUS LOANS.
(a) Amendment.--Section 428B(d) (20 U.S.C. 1078-2(d)) is
amended by amending paragraphs (1) and (2) to read as
follows:
``(1) Commencement of repayment.--Repayment of principal on
loans made under this section shall--
``(A) commence not later than--
``(i) 60 days after the date such loan is disbursed by the
lender, except as provided in clause (ii); and
``(ii) if agreed upon by a parent borrower, the day after 6
months after the date the student for whom the loan is
borrowed ceases to carry at least one-half the normal full-
time academic workload (as determined by the institution);
and
``(B) be subject to deferral during any period during which
the graduate or professional student or the parent meets the
conditions required for a deferral under section 427(a)(2)(C)
or 428(b)(1)(M).
``(2) Capitalization of interest.--
``(A) In general.--Interest on loans made under this
section--
``(i) which accrues prior to the beginning of repayment
under paragraph (1)(A)(i), shall be added to the principal
amount of the loan; and
``(ii) which accrues prior to the beginning of repayment
under paragraph (1)(A)(ii) or during a period in which
payments of principal are deferred pursuant to paragraph
(1)(B) shall, if agreed upon by the borrower and the lender--
``(I) be paid monthly or quarterly; or
``(II) be added to the principal amount of the loan not
more frequently than quarterly by the lender.
``(B) Insurable limits.--Capitalization of interest under
this paragraph shall not be deemed to exceed the annual
insurable limit on account of the borrower.''.
(b) Conforming Amendment.--Section 428(b)(7)(C) (20 U.S.C.
1078(b)(7)(C)) is amended by striking ``, 428B,''.
(c) Effective Date.--The amendments made by this section
shall be effective for loans issued on or after July 1, 2008.
SEC. 4. SPECIAL RULES FOR PLUS LOANS.
Section 428B(a)(3) is amended to read as follows:
``(3) Special rules.--
``(A) Parent borrowers.--Whenever necessary to carry out
the provisions of this section, the terms `student' and
`borrower' as used in this part shall include a parent
borrower under this section.
``(B) Extenuating circumstances.--For loans made on or
after July 1, 2008, and before July 1, 2009, a lender may
determine that a borrower meets the extenuating circumstances
requirement described in regulations promulgated by the
Secretary to carry out this section or section 455 if the
borrower is 180 or fewer days delinquent on their home
mortgage payments.''.
SEC. 5. LENDER-OF-LAST-RESORT.
(a) In General.--Section 428(j) of the Higher Education Act
of 1965 (20 U.S.C. 1078(j)) is amended--
(1) in the first sentence of paragraph (1), by striking
``students eligible to receive interest benefits paid on
their behalf under subsection (a) of this section who are
otherwise unable to obtain loans under this part'' and
inserting ``students and parents who are otherwise unable to
obtain loans under this part (except for consolidation loans
under section 428C) or who attend an institution of higher
education in the State that is designated under paragraph
(4)'';
(2) in paragraph (2)(B), by inserting ``, in the case of
students and parents applying for loans under this subsection
because of an inability to otherwise obtain loans under this
part (except for consolidation loans under section 428C),''
after ``lender, nor'';
(3) in paragraph (3)(C)--
(A) in the first sentence, by inserting ``or designates an
institution of higher education for participation in the
program under this subsection under paragraph (4),'' after
``under this part''; and
(B) in the third sentence, by inserting ``or to eligible
borrowers who attend an institution in the State that is
designated under paragraph (4)'' after ``problems''; and
(4) by adding at the end the following:
``(4) Institution-wide student qualification.--Upon the
request of an institution of higher education and pursuant to
standards developed by the Secretary, the guaranty agency
designated for a State shall designate such institution for
participation in the lender-of-last-resort program under this
paragraph. If the guaranty agency designates an institution
under this paragraph, such agency shall make loans, in the
same manner as such loans are made under paragraph (1), to
students and parent borrowers of the designated institution,
regardless of whether the students or parent borrowers are
otherwise unable to obtain loans under this part (other than
a consolidation loan under section 428C).''.
(b) Effective Date.--The amendments made by subsection (a)
shall take effect on the date of enactment of this Act.
SEC. 6. MANDATORY ADVANCES.
(a) In General.--Section 421(b) of the Higher Education Act
of 1965 (20 U.S.C. 1071(b)) is amended--
(1) in paragraph (4), by striking ``programs, and'' and
inserting ``programs,'';
(2) in paragraph (5), by striking ``agencies.'' and
inserting ``agencies, and''; and
(3) by adding at the end the following:
``(6) there is authorized to be appropriated, and there are
appropriated, out of any money in the Treasury not otherwise
appropriated, such sums as may be necessary for the purpose
of carrying out section 422(c)(7).''.
(b) Effective Date.--The amendments made by subsection (a)
shall take effect on the date of enactment of this Act.
SEC. 7. TEMPORARY AUTHORITY TO PURCHASE STUDENT LOANS.
(a) Spending Authority.--
(1) Authority granted.--The first sentence of section
451(a) of the Higher Education Act of 1965 (20 U.S.C.
1087a(a)) is amended--
(A) by inserting ``(1)'' after ``as may be necessary''; and
(B) by inserting before the period at the end of such
sentence the following: ``; and (2) for purchasing loans
under section 459A''.
(2) Conforming amendment.--Section 451(a) of such Act (20
U.S.C. 1087a(a)) is further amended by striking ``Such loans
shall'' and inserting ``Loans made under this part shall''.
(b) Temporary Authority.--Part D of title IV of the Higher
Education Act of 1965 (20 U.S.C. 1087a et seq.) is amended by
inserting after section 459 the following new section:
``SEC. 459A. TEMPORARY AUTHORITY TO PURCHASE STUDENT LOANS.
``(a) Authority To Purchase.--
``(1) Authority; determination required.--Upon a
determination by the Secretary that there is an inadequate
availability of loan capital to meet the demand for loans
under sections 428, 428B, or 428H, whether as a result of
inadequate liquidity for such loans or for other reasons, the
Secretary, in consultation with the Secretary of the
Treasury, is authorized to purchase from any eligible lender,
as defined by section 435(d)(1), loans originated under
sections 428, 428B, or 428H on or after October 1, 2003, on
such terms as the Secretary, the Secretary of the Treasury,
and the Director of the Office of Management and Budget
jointly determine are in the best interest of the United
States, except that any purchase under this section shall not
result in any net cost to the Federal Government, as
determined jointly by the Secretary, the Secretary of the
Treasury, and the Director of the Office of Management and
Budget.
``(2) Regulations required.--The Secretary, the Secretary
of the Treasury, and the Director of the Office of Management
and Budget shall jointly promulgate emergency regulations and
publish such emergency regulations promptly in the Federal
Register concerning the purchases authorized by paragraph
(1).
``(3) Methodology and factors; justification required.--
Such regulations shall outline the methodology and factors
that the Secretary, the Secretary of the Treasury, and the
Director of the Office of Management and Budget shall
consider in evaluating the price at which to purchase loans
under sections 428, 428B, or 428H, and shall include a
justification of how the use of such methodology and
consideration of such factors used to determine purchase
price will ensure that loan purchases do not result in any
net cost to the Federal Government.
``(b) Proceeds.--The Secretary shall require, as a
condition of any purchase under subsection (a), that the
funds paid by the Secretary to any eligible lender under this
section shall be used in a manner consistent with ensuring
continued participation of such lender in the Federal student
loan programs authorized under part B of this title.
``(c) Expiration of Authority.--The Secretary's authority
to purchase loans under this section shall expire on July 1,
2009.''.
(c) Contracting Authority.--Section 456(b) of the Higher
Education Act of 1965 (20 U.S.C. 1087f(b)) is amended by
inserting ``or purchased'' after ``loans made'' each place it
appears in paragraphs (2) and (3).
SEC. 8. SENSE OF CONGRESS.
It is a sense of Congress that, at a time when our economy
is fragile and higher education and retraining opportunities
are more important than ever--
(1) the Federal financial institutions, such as the Federal
Financing Bank and Federal Reserve, and federally chartered
private entities such as the Federal Home Loan Banks and
others, should consider, in consultation with the Secretary
of Treasury and the Secretary of Education, using available
authorities in a timely manner, if needed, to assist in
ensuring that students and families can access Federal
student loans for academic
[[Page H2462]]
year 2008-2009, and if needed in the subsequent academic
year, in a manner that results in no increased costs to
taxpayers; and
(2) any action taken as a result of such consideration
should in no way limit or delay the Secretary of Education's
authority to operate the lender-of-last-resort provisions of
section 428(j) of the Higher Education Act of 1965 (as
amended by this Act), nor the authority to purchase Federal
Family Education Loan Program loans, as authorized by section
459A of such Act (as added by this Act).
The Acting CHAIRMAN. No further amendment to the bill, as amended,
shall be in order except those printed in part B of the report. Each
further amendment may be offered only in the order printed in the
report, by a Member designated in the report, shall be considered read,
shall be debatable for the time specified in the report, equally
divided and controlled by the proponent and an opponent of the
amendment, shall not be subject to amendment, and shall not be subject
to a demand for division of the question.
Part B Amendment No. 1 Offered by Mr. George Miller of California
The Acting CHAIRMAN. It is now in order to consider amendment No. 1
printed in part B of House Report 110-590.
Mr. GEORGE MILLER of California. Madam Chairman, I offer an
amendment.
The Acting CHAIRMAN. The Clerk will designate the amendment.
The text of the amendment is as follows:
Part B amendment No. 1 offered by Mr. George Miller of
California:
In section 2 of the bill--
(1) redesignate subsection (b) as subsection (c); and
(2) after subsection (a) insert the following new
subsection:
(b) Student Eligibility.--Loan limit increases authorized
by the amendments made by this section shall be available
only to students who meet the requirements of section 484(a)
of the Higher Education Act of 1965 (20 U.S.C. 1091(a)).
In section 428H(d) of the Higher Education Act of 1965, as
amended by section 2(a) of the bill--
(1) in clause (i) of paragraph (2)(A), strike ``$14,000''
and insert ``$12,000''; and
(2) in subclause (II) of paragraph (4)(A)(i), strike
``clause (i)'' and insert ``subclause (I)''.
In section 3 of the bill--
(1) in subsection (a), insert ``of the Higher Education Act
of 1965'' after ``428B(d)''; and
(2) in subsection (b), insert ``of such Act'' after
``428(b)(7)(C)''.
In section 4 of the bill, insert ``of the Higher Education
Act of 1965 (20 U.S.C. 1078-2(a)(3))'' after ``428B(a)(3)''.
In section 428B(a)(3) of the Higher Education Act of 1965,
as amended by section 4 of the bill, strike subparagraph (B)
and insert the following:
``(B)(i) Extenuating circumstances.--For loans made on or
after July 1, 2008, and before July 1, 2009, a lender may
determine that extenuating circumstances exist under the
regulations promulgated pursuant to paragraph (1)(A) if an
applicant for a loan under this section is delinquent for 180
days or less on their home mortgage payments and is not more
than 89 days delinquent on the repayment of any other debt.
``(ii) Master calendar inapplicable.--Section 482 shall not
apply to determinations made under clause (i).''.
In section 5(a) of the bill--
(1) in paragraph (1), strike ``students and parents'' and
insert ``eligible students and parents'';
(2) in paragraph (3)(A), strike the comma after ``paragraph
(4)''; and
(3) in paragraph (4), strike paragraph (4) of section
428(j) of the Higher Education Act of 1965 added by such
paragraph of the bill and insert the following:
``(4) Institution-wide student qualification.--Upon the
request of an institution of higher education and pursuant to
standards developed by the Secretary, the Secretary shall
designate such institution for participation in the lender-
of-last-resort program under this paragraph. If the Secretary
designates an institution under this paragraph, the guaranty
agency designated for the State in which the institution is
located shall make loans, in the same manner as such loans
are made under paragraph (1), to students and parent
borrowers of the designated institution, regardless of
whether the students or parent borrowers are otherwise unable
to obtain loans under this part (other than a consolidation
loan under section 428C).
``(5) Standards developed by the secretary.--In developing
standards with respect to paragraph (4), the Secretary may
require--
``(A) an institution of higher education to demonstrate
that, despite due diligence on the part of the institution,
the institution has been unable to secure the commitment of
lenders willing to make loans to a significant number of
students attending the institution;
``(B) that, prior to making a request under such paragraph
for designation for participation in the lender-of-last-
resort program, an institution of higher education shall
demonstrate that the institution has met a minimum threshold,
as determined by the Secretary, for the number or percentage
of students at such institution who have received rejections
from eligible lenders for loans under this part; and
``(C) any other standards and guidelines the Secretary
determines to be appropriate.''.
In section 459A of the Higher Education Act of 1965, as
added by section 7 of the bill--
(1) in subsection (a)(1), insert ``, or enter into forward
commitments to purchase,'' after ``is authorized to
purchase'';
(2) in subsection (b)--
(A) strike ``shall be used'' and all that follows through
the period and insert the following: ``shall be used (1) to
ensure continued participation of such lender in the Federal
student loan programs authorized under part B of this title,
and (2) to originate new Federal loans to students, as
authorized under part B of this title.'';
(3) redesignate subsection (c) as subsection (d); and
(4) after subsection (b), insert the following new
subsection:
``(c) Maintaining Servicing Arrangements.--The Secretary
may, if agreed upon by an eligible lender selling loans under
this section, contract with such lender for the servicing of
the loans purchased, provided that--
``(1) the cost of such servicing arrangement does not
exceed the cost the Federal Government would otherwise incur
for the servicing of loans purchased, as determined under
subsection (a); and
``(2) such servicing arrangement is in the best interest of
the borrowers whose loans are purchased.
The Acting CHAIRMAN. Pursuant to House Resolution 1107, the gentleman
from California (Mr. George Miller) and a Member opposed each will
control 5 minutes.
The Chair recognizes the gentleman from California.
Mr. GEORGE MILLER of California. Madam Chairman, I rise in support of
the manager's amendment to H.R. 5715, the Ensuring Continued Access to
Student Loans Act of 2008. The amendment was done on a bipartisan basis
with the input of the senior Republican member, Mr. McKeon. The
manager's amendment we are considering here today makes various
technical changes to the legislation and additional substantive changes
to ensure continued access to Federal student loans.
Specifically, the amendment makes the following changes: It targets
loan limit increases to undergraduate students and families. It
clarifies that only eligible students as defined under section 435(a)
may qualify for these loans as with all other Federal student aid. It
clarifies that at the discretion of the Secretary, a loan may continue
to be serviced by the current lender. And in regard to school-wide
Lender of Last Resort eligibility, it specifies that the Secretary of
Education shall determine whether a school qualifies and provides
criteria for the Secretary to consider in making the determination. It
specifies that funds received by lenders from loan sales will be used
to originate new loans. And it clarifies that, at the discretion of the
Secretary, a loan purchased by the Secretary may continue to be
serviced by the current lender.
Now more than ever, families deserve every assurance that we are
doing all that we can to make sure that they will continue to be able
to access the low-cost loans they need to pay for college, regardless
of what happens in the credit markets. I am confident that our efforts,
coupled with the proper planning by the Federal Government, will
provide them with that guarantee.
I urge my colleagues to support this amendment.
Madam Chairman, I reserve the balance of my time.
Mr. McKEON. Madam Chairman, I claim time in opposition, but I will
not be opposing the amendment.
The Acting CHAIRMAN. Without objection, the gentleman from California
is recognized for 5 minutes.
There was no objection.
Mr. McKEON. Madam Chairman, I yield myself such time as I may
consume.
I want to thank Chairman Miller for his work on this amendment. Like
the underlying bill, this amendment was developed on a bipartisan basis
to respond to some of the very specific challenges facing our student
loan program. Although many of the challenges in this amendment are
technical in nature, they will help to perfect the bill and ensure it
has the impact we intend.
For instance, the purpose of this bill has never been to force a
shift from the FFEL program to the Direct Loan program. That's why the
amendment clarifies that if the Secretary of Education does purchase
outstanding
[[Page H2463]]
loans, she can keep those loans with their existing servicing
arrangements. This will ensure a seamless transition for students while
having the intended effect of freeing up capital to make new loans.
The amendment also ensures the bill will have no cost to taxpayers.
From the outset Chairman Miller and I agreed that it was important to
move a bill that made meaningful reforms without driving up spending.
H.R. 5715 does exactly that.
With regard to the Lender of Last Resort program, the amendment
clarifies some of the steps that must be taken in order to designate
school-wide participation in this program. These reforms will be
enhanced even further by the amendment that will be offered shortly by
Representative Petri.
I appreciate Chairman Miller's willingness to include language
proposed by Representative Platts that adds greater clarity and
flexibility within the Secretary's ability to purchase loans. Although
it was always our intent that this new, temporary authority would
include the concept of a ``forward purchase agreement,'' this amendment
makes it explicit that the Secretary can enter into agreements to
purchase loans in the future. The amendment also clarifies that lenders
must reinvest the proceeds from the sale of loans to the Secretary back
into making new loans to students.
Once again, I want to thank Chairman Miller for his work on this
amendment and on the bill as a whole.
Madam Chairman, I yield back the balance of my time.
Mr. GEORGE MILLER of California. Madam Chairman, I yield back the
balance of my time.
The Acting CHAIRMAN. The question is on the amendment offered by the
gentleman from California (Mr. George Miller).
The question was taken; and the Acting Chairman announced that the
ayes appeared to have it.
Mr. GEORGE MILLER of California. Madam Chairman, I demand a recorded
vote.
The Acting CHAIRMAN. Pursuant to clause 6 of rule XVIII, further
proceedings on the amendment offered by the gentleman from California
will be postponed.
Part B Amendment No. 2, as Modified, Offered by Mr. Petri
The Acting CHAIRMAN. It is now in order to consider amendment No. 2
printed in part B of House Report 110-590.
Mr. PETRI. Madam Chairman, I offer an amendment.
The Acting CHAIRMAN. The Clerk will designate the amendment.
The text of the amendment is as follows:
Part B amendment No. 2 offered by Mr. Petri:
At the end of section 5 of the bill, add the following new
subsection:
(c) Review of Inducements Limitations.--Within 90 days
after the date of enactment of this Act, the Secretary of
Education shall review, and as necessary revise, the
Department of Education's regulations concerning prohibited
guaranty agency inducements to eligible lenders (34 CFR
682.401(a)) to ensure that such agency's do not engage in
improper inducements in the expansion of operations of the
lender-of-last-resort program as authorized by the amendments
made by this section. The Secretary shall submit a report on
the review and revision required by this subsection to the
Committee on Education and Labor of the House of
Representatives and the Committee on Health, Education,
Labor, and Pensions of the Senate within 180 days after such
date of enactment.
The Acting CHAIRMAN. Pursuant to House Resolution 1107, the gentleman
from Wisconsin (Mr. Petri) and a Member opposed each will control 5
minutes.
The Chair recognizes the gentleman from Wisconsin.
Mr. PETRI. Madam Chairman, I ask unanimous consent that the amendment
be modified by the text that I have placed at the desk.
The Acting CHAIRMAN. The Clerk will report the modification.
The Clerk read as follows:
Modification to part B amendment No. 2 offered by Mr.
Petri:
At the end of section 5 of the bill, add the following new
subsection:
(c) Review of Inducements Limitations.--Within 90 days
after the date of enactment of this Act, the Secretary of
Education shall review, and as necessary revise, the
Department of Education's regulations concerning prohibited
guaranty agency inducements to eligible lenders (34 CFR
682.401(e)) to ensure that such agency's do not engage in
improper inducements in the expansion of operations of the
lender-of-last-resort program as authorized by the amendments
made by this section. The Secretary shall submit a report on
the review and revision required by this subsection to the
Committee on Education and Labor of the House of
Representatives and the Committee on Health, Education,
Labor, and Pensions of the Senate within 180 days after such
date of enactment.
The Acting CHAIRMAN (during the reading). Without objection, the
reading of the modification is dispensed with.
There was no objection.
The Acting CHAIRMAN. Without objection, the amendment is modified.
There was no objection.
The Acting CHAIRMAN. The gentleman from Wisconsin is recognized for 5
minutes.
Mr. PETRI. Thank you, Madam Chairman.
Under current law, Federal Family Education Loan Program guaranty
agencies are obligated to serve as lenders of last resort to borrowers
who have been denied a Federal student loan by two lenders. The
legislation we are considering today puts in place measures that will
permit an entire higher education institution, rather than just
individuals, to participate in the Lender of Last Resort program and
also clarifies the Secretary of Education's authority to advance
mandatory funds to guaranty agencies to serve as the lender of last
resort.
The amendment I am offering today would simply require the Secretary
of Education to review and revise as necessary the regulations
concerning prohibited guaranty agency inducements to ensure that such
agencies do not engage in improper inducements as lenders of last
resort.
Currently, guaranty agencies are provided flexibility from the
general lender prohibitions regarding inducements and exempted from
others when they act as lenders of last resort. While this flexibility
may be necessary, the bill before us would expand the role of guaranty
agencies acting as lenders of last resort. And it's prudent to take
another look at these regulations to be sure that students and
taxpayers continue to be protected.
I ask my colleagues to vote ``yes'' on this amendment.
Madam Chairman, I reserve the balance of my time.
Mr. GEORGE MILLER of California. Madam Chairman, I claim the time in
opposition to the amendment, although I do not expect to oppose the
amendment.
The Acting CHAIRMAN. The gentleman from California is recognized for
5 minutes.
Mr. GEORGE MILLER of California. Madam Chairman, I commend Mr. Petri
for this amendment. He addresses an oversight in the legislation in
making sure that the Secretary has the ability to review and revise the
regulations concerning prohibited guaranty agency inducements to ensure
that agencies do not engage in improper inducements. We don't think
this is a problem, but we had a problem in the past in the rest of the
program, and we passed on a bipartisan basis, the Student Loan Sunshine
Act, and I think this amendment is an important part of keeping the
integrity of that act and the continuity within the student loan
program so that all participants in that program understand that we
cannot condone even an appearance of improper relationships. When
students and families are borrowing money and making sacrifices for
that money, we want to make sure that they get the best deal available
and they get the best facts available to them.
I thank the gentleman for offering the amendment.
Madam Chairman, I yield back the balance of my time.
Mr. PETRI. Madam Chairman, I yield such time as he may consume to the
gentleman from California (Mr. McKeon).
Mr. McKEON. I thank the gentleman for yielding.
Madam Chairman, I rise in support of this commonsense amendment.
The Lender of Last Resort program was never intended to serve as a
bailout for our student loan system as a whole. Rather, it was
developed as a backstop for individual students on a case-by-case basis
to be able to access a student loan if they encountered some rare
circumstance in which they could not borrow through the standard
channels.
[[Page H2464]]
I, for one, hope that the broad-based Lender of Last Resort authority
in this bill will never be used. After all, the goal of this
legislation is to prevent such a crisis within the loan program before
it occurs. But I appreciate the steps being taken to ensure that if the
Lender of Last Resort program ever needs to be deployed on a larger
scale, we will have the infrastructure and processes in place to allow
it.
However, because the program was simply never intended to be used on
a school-wide basis, we should ensure that in implementing this
authority, we are not unintentionally subverting current regulations.
We also want to ensure that a guaranty agency is not unnecessarily
punished for stepping in as a lender if needed. That is why this
amendment requests that the Secretary review the regulations with the
Lender of Last Resort program in mind. This program should be
implemented in a manner that will be effective, efficient, and in the
best interest of students.
I want to thank Representative Petri for offering this amendment,
which requires the Secretary to ensure that regulations are updated to
reflect the new responsibilities that would be given to guaranty
agencies operating as a lender of last resort for entire schools rather
than individual students.
{time} 1130
This amendment is consistent with our longstanding support for
greater sunshine, transparency and consumer protections.
I support this amendment, and I urge its passage.
Mr. PETRI. I yield back my time.
The Acting CHAIRMAN. The question is on the amendment offered by the
gentleman from Wisconsin (Mr. Petri), as modified.
The amendment, as modified, was agreed to.
Part B Amendment No. 3 Offered by Mr. Castle
The Acting CHAIRMAN. It is now in order to consider amendment No. 3
printed in part B of House Report 110-590.
Mr. CASTLE. Madam Chairman, I offer an amendment.
The Acting CHAIRMAN. The Clerk will designate the amendment.
The text of the amendment is as follows:
Part B amendment No. 3 offered by Mr. Castle:
At the end of the bill, add the following new section:
SEC. 9. GAO STUDY ON IMPACT OF INCREASED LOAN LIMITS.
(a) Study Required.--The Comptroller General shall conduct
a study to evaluate the impact of the increase in Federal
loan limits provided for in section 2 of this Act and section
8005 of the Deficit Reduction Act of 2005 with respect to the
impact on--
(1) tuition, fees, and room and board at institutions of
higher education; and
(2) private loan borrowing by students and parents for
attendance at institutions of higher education.
(b) Study Components.--The study required under subsection
(a) shall be conducted for each major sector of institutions
of higher education over a 5-year time period. The report
shall specifically analyze the following:
(1) Whether, on average, tuition, fees, and room and board
increase, decrease, or remain unchanged in each such sector
after the increases in Federal loan limits take effect.
(2) Whether the amount of private educational loans taken
out by students (and their parents) at institutions in each
such sector to pay tuition, fees, and room and board
increase, decrease, or remain unchanged.
(c) Report.--Not later than one year after the date of
enactment of this Act, the Comptroller General shall provide
an interim report to the Committee on Education and Labor of
the House of Representatives and the Committee on Health,
Education, Labor, and Pensions of the Senate including the
initial results of the study conducted under this section.
The Comptroller General shall follow up with such Committees
after the third year and the fifth year after such date of
enactment.
The Acting CHAIRMAN. Pursuant to House Resolution 1107, the gentleman
from Delaware (Mr. Castle) and a Member opposed each will control 5
minutes.
The Chair recognizes the gentleman from Delaware.
Mr. CASTLE. I yield myself such time as I may consume.
The amendment I have offered with Representative Welch today is meant
to complement the underlying legislation and help us better utilize the
Federal student loan program. I am supportive of H.R. 5715, which I
believe will help prevent instability in the student loan market and
ensure students have access to funds for higher education. This
amendment doesn't alter the base bill but can help us learn more about
rising costs.
As you know, the committee has actively worked to identify causes of
rising college costs while tuition rates continue to increase more
rapidly than household incomes. This rate of increase continues to
prove to be overly burdensome for both students and families as they
save and borrow to pay for higher education.
Adding another layer of complexity is the existing slump in credit
markets. For this reason, several lending institutions have recently
announced that soaring lending costs have caused them to decrease
availability of new loans to American students.
Today, I am pleased Congress has the opportunity to vote on this
bipartisan legislation to protect students and families by ensuring
disruptions in the financial markets do not prevent students from
pursuing their higher education goals.
I believe this legislation can help restore investor confidence in
the marketplace, provide additional flexibility for parents through a
new, optional grace period for PLUS loan payments until after their
children graduate, as well as ensure that parents struggling with
mortgage payments are not automatically denied credit through PLUS
loans.
Also, this bill expands loan availability through higher unsubsidized
Stafford loan limits. This provision, along with a provision passed
under the Deficit Reduction Act of 2005 which increased loan limits on
federally subsidized loans, enables students to receive more Federal
funding, reducing reliance on higher cost private loans.
Although I strongly support these provisions, I believe we have an
opportunity here to determine what impact, if any, these changes have
on tuition, fees, and room and board costs and private loan borrowing
by students and parents.
The amendment I am offering today does just this. The amendment will
provide for a review and evaluation by the Government Accountability
Office, GAO, of these two aspects of higher education.
Specifically, the GAO study will examine institutions of higher
education over a 5-year time period to look at whether tuition, fees,
and room and board increase, decrease, or remain neutral after the
increases in loan limits take effect, as well as whether the amount of
private educational loans taken out by students and their families to
pay tuition, fees, and room and board increase, decrease, or remain
neutral.
I urge my colleagues to support this commonsense amendment to shine
some light on possible causes of the rising cost of higher education
and also urge support for the base bill to maintain access to the
Federal student loan program.
I thank Mr. Welch for working with me on this amendment and for
speaking in favor of this bill yesterday before the House. And we would
just like to say that I just think it is so important that we deal with
the costs of higher education as well as the financing of higher
education. Hopefully, by this add-on, we will be able to do at least a
little bit of that.
I reserve the balance of my time.
Mr. GEORGE MILLER of California. Madam Chairman, I rise to claim the
time in opposition, although I do not expect to oppose the amendment.
The Acting CHAIRMAN. The gentleman from California is recognized for
5 minutes.
Mr. GEORGE MILLER of California. Madam Chairman, Members of the
House, this is an important amendment.
This committee, on a bipartisan basis, has struggled with trying to
get a good handle, if you will, an understandable handle on the cost of
education and the reasons for the increases in the cost of education,
as we watched the cost spiral up in higher education much faster than
the general inflation index. And it is a rising concern in families. As
their budgets compete with fuel, food and mortgage payments, this
obviously becomes a very serious matter.
Congressman McKeon and Congressman Castle have been on this watch
[[Page H2465]]
for many years in this committee trying to help us come to grips with
this problem and trying to carry on a positive conversation with the
universities and colleges so that we can better define those costs that
they control, the costs that they don't control, and certainly the
actions of the States in their support for the public institutions. I
think this amendment is very helpful.
Congressman Welch has spoken to me about this during our
deliberations of the higher education bill and of the college loan
reduction bill that we passed last year.
This is an issue that continues to nag at us. I think providing some
good guidance to GAO, with their expertise, we have an opportunity to
really take a good look at a cross-section of institutions, what is
properly driving the increases in cost and what maybe is improperly
driving the increase in cost, and those things that can possibly be
brought under control and be reduced by cooperative actions between the
institutions, the States, and the Federal Government.
So I strongly support this amendment, and I want to thank Congressman
Castle and Congressman Welch for offering this amendment.
I yield back the balance of my time.
Mr. CASTLE. Madam Chairwoman, I want to thank Chairman Miller for his
kind words.
I think that all of us, including Mr. McKeon, on whom I will call in
a moment, would all agree that we need to educate our young people as
well as we can, and they need to be able to afford it. And anything we
can do to help in that area is something that we should be doing.
I yield to the gentleman from California (Mr. McKeon) whatever time
he may consume.
Mr. McKEON. Madam Chairman, I thank the gentleman for yielding and
for his longstanding commitment to addressing the rising costs of
college.
This amendment gets to the heart of the concern that many of us have
harbored for a long time. It takes a hard look at whether or not an
increase in Federal aid will lead to an increase in college tuition.
Everyone recognizes that Federal student aid is a good investment. Pell
Grants, together with campus-based aid programs, Federal student loans
and other higher education benefits help make a college education
accessible to every American student.
With enactment of the Higher Education Act in 1965, these financial
aid programs truly did make college more affordable. But beginning in
the eighties and in the decades since, college tuition has skyrocketed.
Despite our best efforts to keep pace by investing in student aid,
college is becoming less affordable for many families. Tuition goes up,
so we increase financial aid. But when we increase financial aid,
tuition goes up. It's a vicious cycle. And we are losing ground.
Unfortunately, this pattern has even led some of us to question
whether an investment in financial aid is a wise one. After all, if
we're driving tuition increases by, for instance, increasing loan
limits, we may be doing more harm than good.
I think there's agreement that this bill will help borrowers by
increasing unsubsidized borrowing limits. Particularly for borrowers
who are unable to access higher-cost credit-based private loans, this
additional Federal loan availability may be the difference between
enrolling or not. But as we increase that type of financial aid, we
need to very seriously review the consequences of that action. That's
why this amendment calls on the Government Accountability Office to
determine how the increase in borrowing limits impacts tuition.
I thank Representative Castle along with Representative Welch for
their leadership on this issue. It's a good amendment. It improves the
bill. I urge a ``yes'' vote.
Mr. CASTLE. I yield back the balance of my time.
The Acting CHAIRMAN. The question is on the amendment offered by the
gentleman from Delaware (Mr. Castle).
The amendment was agreed to.
Part B Amendment No. 4 Offered by Ms. Castor
The Acting CHAIRMAN. It is now in order to consider amendment No. 4
printed in part B of House Report 110-590.
Ms. CASTOR. Madam Chairman, I offer an amendment.
The Acting CHAIRMAN. The Clerk will designate the amendment.
The text of the amendment is as follows:
Part B amendment No. 4 offered by Ms. Castor:
In section 428B(a)(3)(B) of the Higher Education Act of
1965, as amended by section 4 of the bill, insert ``or on
medical bill payments'' after ``home mortgage payments''.
The Acting CHAIRMAN. Pursuant to House Resolution 1107, the
gentlewoman from Florida (Ms. Castor) and a Member opposed each will
control 5 minutes.
The Chair recognizes the gentlewoman from Florida.
Ms. CASTOR. Madam Chairman, this amendment ensures that hardworking
families who are feeling the strain of skyrocketing health care costs
can still afford to send their children to college. The amendment
applies to the Federal parent PLUS loans. PLUS loans are the non-need-
based, federally guaranteed, low-interest loans available to parents
for their children's undergraduate tuition, room and board and other
expenses.
Our neighbors are really getting squeezed these days. They are socked
with the rising cost of housing and health care. And many families are
very concerned that a college education may be out of reach for their
children due to these rising costs.
This amendment allows parents to continue to access low-interest PLUS
loans even if they have fallen behind on medical bills only up to 180
days. This extenuating circumstance exemption is identical to the one
already provided in the bill for mortgage payment delinquencies.
Housing and health care are the primary sources of financial hardship
for families. Late mortgage payments and uncollected copayments for
doctors' visits are among the primary reasons for bad debt. But these
short-term and temporary extenuating circumstances should not bar
parents from assisting their children with attending college.
By adding this amendment to section 4, special rules for PLUS loans,
we ensure that hardworking families feeling the strain in this economy
of skyrocketing health care costs can still afford to send their
children to college.
I would like to thank Chairman Miller, Ranking Member McKeon, all of
the members on the Education and Labor Committee and the professional
staff for their work.
Mr. GEORGE MILLER of California. Will the gentlewoman yield?
Ms. CASTOR. I yield to the gentleman from California.
Mr. GEORGE MILLER of California. I just want to thank the gentlewoman
from Florida for introducing this amendment. She had talked to me about
this early on, and it was an oversight. But she has raised the issue
that for families that have engaged in serious medical encounters, the
question of what the real bill is becomes a matter of serious
negotiations that can take over a period of time.
You get your bill. It says you owe $65,000. And then it says, but the
real cost was $45,000, and somebody will pay $20,000, and you owe
whatever is in between. And then you find out that is really not true,
that was the initial billing, and you back over a period of months.
Those negotiations, because of an unexpected serious medical encounter
within a family, should not bar, in these times, those individuals from
being able to access student loans. It doesn't mean they've lost their
incomes. It doesn't mean any of that at that point.
I think it is a very important addition to this legislation as we are
trying to weave together a support system for families that must rely
on loans for the education of their children.
I want to thank you very much for offering this amendment.
Ms. CASTOR. Madam Chairman, I reserve the balance of my time.
Mr. McKEON. I claim the time in opposition, although I am not
opposed, Madam Chairman.
The Acting CHAIRMAN. Without objection, the gentleman from California
is recognized 5 minutes.
There was no objection.
Mr. McKEON. I rise in support of the gentlelady's amendment, and I
yield myself such time as I may consume.
The purpose of this bill is to address the unique challenges facing
students and families in this time of economic
[[Page H2466]]
uncertainty. That is why the bill takes steps to ensure parents are not
automatically denied a PLUS loan simply because they're struggling with
the same mortgage troubles facing so many other families in the
country.
This amendment is consistent with the spirit of our bill because it
recognizes that families also may be grappling with medical bills. And
as the chairman explained, sometimes you are hit with a bill, and that
shows up as a liability which would put you out of reach of getting
another loan, and, in fact, you may not have that liability. And until
that is clarified, you are held in abeyance. And students can't wait.
So this is a very important amendment that the gentlelady has
presented. I thank Representative Castor for her amendment. It makes
the bill better.
I yield back the balance of my time.
Ms. CASTOR. I would like to thank, again, the gentlemen from
California for their work on this legislation and their work on behalf
of students and parents across this country.
I urge adoption of the amendment.
I yield back the balance of my time.
The Acting CHAIRMAN. The question is on the amendment offered by the
gentlewoman from Florida (Ms. Castor).
The amendment was agreed to.
Mr. GEORGE MILLER of California. Madam Chairman, I move that the
committee do now rise.
The motion was agreed to.
Accordingly, the Committee rose; and the Speaker pro tempore (Ms.
Castor) having assumed the chair, Mrs. Tauscher, Acting Chairman of the
Committee of the Whole House on the state of the Union, reported that
that Committee, having had under consideration the bill (H.R. 5715) to
ensure continued availability of access to the Federal student loan
program for students and families, had come to no resolution thereon.
____________________