[Congressional Record Volume 154, Number 70 (Wednesday, April 30, 2008)]
[Senate]
[Pages S3642-S3644]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         ENSURING CONTINUED ACCESS TO STUDENT LOANS ACT OF 2008

  Mr. DURBIN. I ask unanimous consent that the Senate proceed to the 
immediate consideration of Calendar No. 722, H.R. 5715.
  The PRESIDING OFFICER. The clerk will report the bill by title.
  The bill clerk read as follows:

       A bill (H.R. 5715) to ensure continued availability of 
     access to the Federal student loan program for students and 
     families.

  There being no objection, the Senate proceeded to consider the bill.
  Mr. KENNEDY. Mr. President, with each passing day, families are 
confronted with growing challenges stemming from our lagging economy. 
We have had a surge of bad news, and there is almost certainly more to 
come. People have done everything right. They have worked hard all 
their lives. They have been good citizens and they cared for their 
communities. Many have served in the military. They have bought homes 
in which to raise their families and have dutifully paid the mortgage 
every month.
  But now they are seeing everything they have worked for, everything 
they have saved for and sacrificed for placed at risk. Families are 
stretched to the limit by stagnant wages and soaring prices. They have 
seen the value of their homes and retirement savings plunge. They 
wonder if they can afford to put gas in the tank in order to get to 
work.
  Now there is a danger that their children will be the next victims of 
the economic crisis.
  What started as a crisis in the housing market has spread to the 
banks and beyond. We must draw a line there and not let the crisis in 
the credit markets become a crisis for students struggling to pay for 
college and access to the American dream.
  If we allow that to happen, we not only limit the horizon for a new 
generation of Americans, but we will damage the long-term economic 
health of America as well. More than ever, a college degree is the key 
to the door of opportunity for individual students. Sending more of our 
students to college is key to our international competitiveness in the 
global economy.
  Yet students are facing new obstacles as they pay for their 
education. The credit crisis in the mortgage market has rippled 
throughout the lending industry and has begun to affect student loans.

  The full scope of the problem isn't clear yet, but we cannot afford 
to wait for a full-blown crisis before we act. Students are applying 
now for loans to cover the fall term. I am very pleased the Senate 
acted earlier today to ensure that the loans they need will be 
available, and I look forward to prompt action by the House.
  Already, almost 50 lenders have completely dropped out of the Federal 
program. Together, they make up almost 14 percent of the Federal 
student loan market. We need to make sure we have done everything we 
can to protect students in case that downturn continues.
  The first line of defense for students and families is the Direct 
Loan Program. It is insulated from the turbulence of the credit markets 
because the Federal Government provides the capital directly to 
students, without having to pay a bank or other middleman. I have urged 
colleges across the country to sign up to participate in this program 
to protect them from any problems in the credit markets.
  We need to take additional steps to shore up the alternative 
federally subsidized loan program--the FFEL program--in the short term 
as an additional backstop against unacceptable disruptions in the 
financial aid process later this year.
  The legislation the Senate passed today will protect students from 
the problems in the credit markets by ensuring they will be able to 
access federally subsidized loans.
  First, Mr. President, it ensures that private lenders will continue 
to participate in the federally subsidized program by giving the 
Secretary of Education the authority to buy outstanding Federal loans 
in order to provide lenders with the capital needed to make new loans 
to students for the upcoming school year.
  Second, as a backup for students who still have trouble obtaining a 
loan, the bill facilitates students' access to ``lender of last 
resort'' loans. These loans are provided to students through existing 
State-operated guaranty agencies, using capital advanced by the 
Secretary of Education.

  Third, the bill assists students who rely on higher cost, non-
federally guaranteed loans by making additional low-cost Federal 
options available to them and their families.
  The bill raises Federal loan limits for undergraduate students by 
$2,000. This legislation also makes it easier for parents to take out 
low-cost federally subsidized loans on behalf of their children through 
the PLUS loan program. The bill ensures that parents affected by

[[Page S3643]]

the current mortgage crisis can still obtain these loans, and it allows 
parents to delay repayment on these loans until after their child 
graduates from school. This is very important--the fact that it would 
delay repayment until after graduation. That is a major assistance to 
families.
  We are increasing the amount that will be available at the lower 
rates to college students, and we are extending the period of time that 
will help the families in terms of the repayment schedule.
  Finally, this bill helps students decrease student loan debt levels 
by expanding access to an existing grant program, the Academic 
Competitiveness Grants. Under this bill, an additional 100,000 students 
can receive up to $4,000 more a year in grant aid.
  We need to get these safety nets in place now before we are hit with 
a problem that is beyond our control. College affordability should not 
be determined by the quarterly profits or losses of the banks.
  The student aid system is not about banks' bottom lines. As the cost 
of college has tripled over the past 20 years, the Federal student aid 
system of grants and loans has made the dream of college a reality for 
millions of students who could not otherwise afford it.
  In 1993, less than half of all graduates had to take out college 
loans, but in 2004 nearly two-thirds had to borrow to finance their 
education. This chart reflects that. This chart reflects the students 
taking out the loans in 1993. Here it reflects those who took out loans 
for 2004. Years ago, when we passed the student loan program--back in 
1965--these were effectively all grant programs; about 80 percent are 
grants, and only 20 percent are loans. We have seen this dramatic shift 
over the period of recent years now to the loan program. That has all 
kinds of implications in terms of indebtedness to students. Too often 
many of the students are now working one or two jobs, and they are also 
trying to pay off their debts in the future years. This has a very 
important adverse impact in terms of students and their ability to 
pursue careers, the careers that are lower paying, but so critical to 
our society, such as teaching, public health or social work.
  In the 2004-2005 school year in Massachusetts, 86 percent of students 
relied on Federal student loans. The average debt of these students was 
over $18,000. So the best way to help students and families afford 
college is to increase the grant aid. More aid up front means fewer 
loans and less debt on graduation day. That is why Congress acted last 
year on our promise to raise the maximum Pell grant to $5,400 by 2012, 
an increase of $1,350 under the level at which it stagnated under this 
Administration. As a result, students eligible for the maximum Pell 
grant will have to borrow $6,000 less in loans over the course of their 
college career.
  That is a very important relief to those families. The legislation we 
enacted last year also made Federal loans less costly for students by 
cutting the interest rates in half for undergraduates. In addition, we 
helped students manage debt by capping monthly loan payments at 15 
percent of their income. If they go into public service, their loans 
would be completely forgiven as long as they stay in public service for 
a period of years. All of these benefits would be meaningless if 
students cannot obtain the loans they need to pay for college.
  So I thank my Senate colleagues for supporting this legislation, and 
I urge our colleagues in the House of Representatives, and the 
President, to act quickly so our Nation's college students don't become 
the next victims of our slumping economy. Together we can ensure that 
the students get the assistance they need to go to school so their 
dreams don't turn into nightmares, caused by the volatilities of our 
credit markets.
  Mr. President, I am very grateful to my colleague and friend, Senator 
Enzi, the ranking Republican member, and the members of our Education 
Committee for their help and assistance during this period of time. We 
have had hearings on this legislation. We also had field hearings on 
this subject matter and gained a good deal of information. We have 
worked very closely with the Administration, with Secretary Spellings. 
We are grateful to her for her involvement and help and assistance. We 
worked very closely with the House, with both Chairman Miller and Mr. 
McKeon, the ranking minority member as well.
  In the Senate, we have followed a longstanding tradition of trying to 
work and find common ground in education policy to benefit students. I 
think we have done a good job on that over a period of years.
  This legislation, which is basically the stopgap legislation meant to 
deal with the challenges we are facing in the credit markets and that 
students will face in the credit markets, will respond to that need. We 
are on alert for any additional changes that are going to be necessary 
as we move along.
  We are going to be monitoring this very closely in the days and weeks 
ahead, and we welcome ideas and suggestions and recommendations from 
students and from parents, as well as from all others, about how we can 
best ensure that we will be able to make sure that the a college 
education is going to be available to the young people in this country.
  Mr. ENZI. Mr. President, I rise to speak about the importance of the 
Ensuring Continued Access to Student Loans Act of 2008. In a time when 
there is great concern about turmoil in our credit markets, the action 
we are taking today addresses an important segment of those markets. 
What began as a problem within the mortgage market has threatened to 
disrupt the market that students and their parents rely on to obtain 
student loans. This bill is a necessary step to providing students 
access to the loans they need for college this fall.
  While not perfect, this bill will go a long way toward restoring the 
confidence needed for the student loan market to work. And this is 
being accomplished at no cost to the Government.
  The Secretary of Education can now take actions that will increase 
loan limits for students and provide parents with greater access to 
federally guaranteed loans. Both provisions will decrease reliance on 
private loans which cost more and are becoming less available.
  This bill demonstrates our commitment to maintaining the availability 
of loans through the Federal Family Education Loan, FFEL, program as 
well as the Federal Direct Loan program. Currently FFEL serves 80 
percent of postsecondary students who take out student loans, while the 
Federal Direct Loan program serves 20 percent. Both loan programs must 
remain strong.
  With the passage of this bill, we create the means to stabilize the 
college loan market in the coming months. However, I realize that this 
is a short-term solution. We must preserve the long-term viability of 
the FFEL program for the students and parents who rely on it to achieve 
their educational goals.
  Additionally, in this bill we have increased grant support for Pell-
eligible students who take rigorous high school courses and major in 
science, technology, engineering, math and critical foreign languages. 
At a time when our economy needs more individuals with knowledge and 
skills in these areas, this bill provides low-income college students 
with the means to be successful in these high-need, high-reward fields.
  I appreciate the opportunity to work with Senator Kennedy on this 
bill to help students. However, the job is not yet done. We need to 
finish our work on the comprehensive reauthorization of the Higher 
Education Act as a lot has changed since it was reauthorized 10 years 
ago. It is a much more competitive world today. We need a stronger, 
more relevant system of higher education in this country to compete and 
win in the global economy.
  Last July we passed the Senate bill by a vote of 95-0. We are now 
working with the House to get an agreement to the President before 
Memorial Day. I look forward to continuing to work with Senator Kennedy 
to get the best bill possible for students and their families.
  As we finish our work on the reauthorization of the Higher Education 
Act, we will continue to monitor the bill we passed today and its 
impact on the availability of student loans to ensure that it 
accomplishes what we intended. Our students are our future and we have 
to make sure that we provide them with every opportunity to be 
successful.

[[Page S3644]]

  Mr. REED. Mr. President, I strongly support passage of H.R. 5715, the 
Ensuring Continued Access to Student Loans Act.
  As an original cosponsor of the Senate companion of this legislation, 
I am pleased that this bipartisan bill seeks to proactively address the 
impact of the credit crunch on the student loan market, and ensure that 
students attending college this fall have sustained, uninterrupted 
access to affordable Federal grant and loan aid.
  In an effort to increase college access and affordability, last fall 
Congress passed the College Cost Reduction and Access Act, to provide 
over $20 billion in new student financial aid. I was glad to help write 
this law. It increased the maximum Pell Grant by nearly $500 this year 
and to $5,400 by 2012, providing Rhode Island students with $7.8 
million in additional grant aid this year and nearly $85 million over 
the next 5 years. To help students and families borrowing for college, 
this law also cut the interest rate on Federal loans in half for 
undergraduate students over 4 years; capped monthly payments on Federal 
student loans at 15 percent of a borrower's discretionary income; and 
encouraged public service by forgiving loan debt for those like nurses, 
teachers, and librarians after 10 years.
  However, the current instability of the credit markets has raised 
concern in my home State of Rhode Island and across the country 
regarding the availability this spring of Federal loans and how parents 
will be able to pay tuition for their sons and daughters to attend 
college in the fall. Although we have not heard of a single student or 
parent unable to receive a Federal loan yet, the busy time of year for 
borrowing has only just begun as most student loan applications are not 
due until the beginning of May. Additionally, we know that over 50 
lenders nationwide have stopped offering federally subsidized loans.
  As such, this bill takes important initial steps to ensuring that 
students and their families have the necessary financial means to 
attend and succeed in college. It provides additional grant aid 
opportunities for low-income students to reduce their reliance on 
student loans by directing savings generated by the bill into increased 
Academic Competitiveness and National SMART Grants. These two grant 
programs provided nearly 2,100 Rhode Island students with over $2.2 
million in additional grant aid in 2006-07. It also reduces student 
reliance on costlier private loans by expanding the amount a student 
may borrow through a modest raise in the Federal Stafford loan limits. 
The bill also improves the availability of lower-interest federally 
subsidized PLUS loans for parent borrowers by providing an option to 
defer repayment of these loans until after their child graduates 
college, and ensuring that parents recently impacted by the downturn in 
the housing market can continue to qualify for these loans.
  The bill also takes a number of actions to provide an overall Federal 
backstop so students do not have to borrow higher cost private loans. 
First, to ensure lenders have the necessary capital to make new Federal 
loans, the bill gives temporary authority to the Department of 
Education to act as a secondary market for loans originated in the 
federally subsidized student loan market. It also eases the process by 
which a guaranty agency or institution may be deemed eligible as a 
lender of last resort, ensuring the further availability of Federal 
student loans. And the direct loan program is on stand-by for 
institutions concerned that their students may experience difficulty 
finding a Federal loan this year. Direct loans are directly originated 
by the Federal Government and as such, not subject to credit market 
instability and fluctuation.
  I thank Senators Kennedy and Enzi, and their staffs, for their work 
and leadership on this bill. I will continue to very closely monitor 
this situation and explore any additional necessary options in the 
coming weeks to ensure that the credit crunch does not prevent 
deserving students from attending college.
  Mr. DURBIN. Mr. President, I ask unanimous consent that the Kennedy-
Enzi amendment at the desk be agreed to, the bill as amended be read a 
third time and passed, the motions to reconsider be laid on the table 
with no intervening action or debate, and any statements relating to 
the bill be printed in the Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment (No. 4592) was agreed to.
  (The amendment is printed in today's Record under (``Text of 
Amendments.'')
  The amendment was ordered to be engrossed and the bill to be read a 
third time.
  The bill (H.R. 5715), as amended, was read the third time and passed.

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