[Congressional Record Volume 154, Number 63 (Monday, April 21, 2008)]
[Senate]
[Pages S3208-S3209]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DODD (for himself, Mr. Kennedy, Mr. Brown, Mrs. Murray, 
        Mr. Sanders, and Mrs. Clinton):
  S. 2895. A bill to amend the Higher Education Act of 1965 to maintain 
eligibility, for Federal PLUS loans, of borrowers who are 90 or more 
days delinquent on mortgage loan payments, or for whom foreclosure 
proceedings have been initiated, with respect to their primary 
residence; to the Committee on Health, Education, Labor, and Pensions.
  Mr. DODD. Mr. President, I rise today with Senator Kennedy, Senator 
Brown, Senator Murray, Senator Sanders, and Senator Clinton to 
introduce the PLUS Loan Borrower Protection Act of 2008. This bill is 
designed to ensure that students and parents can get access to PLUS 
Loans even if they have been caught up in the subprime mortgage crisis.
  In recent months there have been indications that students may face a 
challenge getting access to some Federal Stafford loans and private 
education loans because of the growing credit crisis in the financial 
markets. While I am unaware of an instance to date when a student has 
been unable to secure a loan, the withdrawal of certain lenders, the 
ongoing turmoil in U.S. credit markets and the absence of liquidity in 
the student loan market have fueled concerns that a potential student 
loan credit crunch may be looming. One which could leave millions of 
students in a last-minute dash to secure the financial assistance they 
need to attend college this academic year.
  Last week I held a hearing in the Senate Banking Committee to examine 
this issue and consider how to address this situation. Based on what I 
heard in that hearing I have contacted Treasury Secretary Paulson and 
Federal Reserve Board Chairman Bernanke to urge each of them to utilize 
all existing tools, including options allowing federally-backed and 
AAA-rated private student loans to be used as collateral at the Fed's 
temporary secured lending facility, TSLF, and using the Federal 
Financing Bank under Treasury to help prime the pump of liquidity, in 
order to help avert a funding crisis in the student loan market. I have 
also cosponsored the Strengthening Student Aid for All Act to bring 
stability and certainty to several Federal financial aid programs. Sen. 
Kennedy took the lead in introducing that legislation and I am proud to 
support him.
  But during the hearing another element of this issue came to my 
attention--Federal PLUS loans. PLUS loans are supposed to be available 
to individuals who do not meet the financial needs tests of other 
Federal financial aid programs. But current law and regulation prevent 
individuals who have been more than 90 days delinquent on a mortgage 
payment or who have gone through a foreclosure within the previous 5 
years from getting a PLUS loan. Normally that is a good standard to 
have--it helps ensure that individuals do not get themselves so much 
into debt that they cannot get out. But with our recent history in the 
subprime mortgage market and the ensuing credit crisis, this 
requirement can have a much broader and more damaging result--denying 
college education to the next generation. Individuals who may need PLUS 
loans more than ever this fall because other sources of aid and lending 
may be unavailable, might be denied this aid because of the 
mismanagement of our housing market. This is unacceptable.
  Ensuring that students have available and affordable access to a 
college education should be among our highest priorities. Our world is 
growing more complex by the day. Never has higher education been more 
crucial to the success of our people and our country. Today, 60 percent 
of the new jobs being created by our economy require at least some 
post-secondary education. Compare that to a half-century ago, when only 
15 per cent of new jobs required some amount of college. If our 
children are to achieve their highest aspirations, and if our Nation's 
economic backbone is to continue to remain strong, then we must ensure 
that the doors of higher education remain open for all who have the 
desire and ability to walk through them.
  That is why we are introducing the PLUS Loan Borrower Protection Act 
of 2008 today. It would eliminate delinquency and foreclosures during 
this tumultuous time from being a disqualifying factor in awarding PLUS 
loans. Lenders would still be able to make judgments about the credit 
of a PLUS loan borrower on the basis of other parts of their credit 
history. But if the only mark against a borrower is being caught up in 
the current mortgage crisis, the lender could not disqualify them. 
Given the current upheaval in our economy, this is a simple and 
necessary step to make sure our children can still get a needed 
education.
  As the Congress moves to address access to student loans and the 
current credit crisis, I will work to include this bill in our 
response. I want to thank Senators Kennedy, Brown, Murray, Sanders, and 
Clinton for joining with me on this bill and I urge my other colleagues 
to cosponsor this important legislation and join me in this effort.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 2895

       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 ``PLUS Loan Borrower 
     Protection Act of 2008''.

     SEC. 2. SPECIAL RULES FOR FEDERAL PLUS LOANS.

       Section 428B(a)(3) of the Higher Education Act of 1965 (20 
     U.S.C. 1078-2(a)(3)) is amended--
       (1) by striking ``Whenever'' and inserting the following:

[[Page S3209]]

       ``(A) Parent borrowers.--Whenever''; and
       (2) by adding at the end the following:
       ``(B) Extenuating circumstances.--
       ``(i) In general.--For purposes of determining if a 
     borrower has an adverse credit history under paragraph (1)(A) 
     on the basis of a delinquency or foreclosure related to a 
     mortgage loan, an extenuating circumstance exists if, during 
     the period beginning January 1, 2007 and ending December 31, 
     2012, the borrower is 90 or more days delinquent on mortgage 
     loan payments, or foreclosure proceedings have been 
     initiated, with respect to the primary residence of the 
     borrower.
       ``(ii) Definition.--The term `mortgage loan' means an 
     extension of credit that is secured by the primary residence 
     of the borrower.''.

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