[Congressional Record (Bound Edition), Volume 147 (2001), Part 19]
[Senate]
[Pages 26291-26292]
[From the U.S. Government Publishing Office, www.gpo.gov]



                HIGHER EDUCATION ACT OF 1965 AMENDMENTS

  Mr. DASCHLE. Mr. President, I ask unanimous consent that the Senate 
proceed to the immediate consideration of Calendar No. 277, S. 1762.
  The PRESIDING OFFICER. The clerk will report the bill by title.
  The legislative clerk read as follows:

       A bill (S. 1762) to amend the Higher Education Act of 1965 
     to establish fixed interest rates for student and parent 
     borrowers, to extend current law with respect to special 
     allowances for lenders, and for other purposes.

  There being no objection, the Senate proceeded to consider the bill.
  Mr. DASCHLE. Mr. President, I ask unanimous consent that the bill be 
read a third time and passed, the motion to reconsider be laid upon the 
table, and that any statements related thereto be printed in the 
Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The bill (S. 1762) was read the third time and passed as follows:

                                S. 1762

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. INTEREST RATE PROVISIONS.

       (a) FFEL Fixed Interest Rates.--
       (1) Amendment.--Section 427A of the Higher Education Act of 
     1965 (20 U.S.C. 1077a) is amended--
       (A) by redesignating subsections (l) and (m) as subsections 
     (m) and (n), respectively; and
       (B) by inserting after subsection (k) the following new 
     subsection:
       ``(l) Interest Rates for New Loans on or After July 1, 
     2006.--
       ``(1) In general.--Notwithstanding subsection (h), with 
     respect to any loan made, insured, or guaranteed under this 
     part (other than a loan made pursuant to section 428B or 
     428C) for which the first disbursement is made on or after 
     July 1, 2006, the applicable rate of interest shall be 6.8 
     percent on the unpaid principal balance of the loan.
       ``(2) PLUS loans.--Notwithstanding subsection (h), with 
     respect to any loan under section 428B for which the first 
     disbursement is made on or after July 1, 2006, the applicable 
     rate of interest shall be 7.9 percent on the unpaid principal 
     balance of the loan.
       ``(3) Consolidation loans.--With respect to any 
     consolidation loan under section 428C for which the 
     application is received by an eligible lender on or after 
     July 1, 2006, the applicable rate of interest shall be at an 
     annual rate on the unpaid principal balance of the loan that 
     is equal to the lesser of--
       ``(A) the weighted average of the interest rates on the 
     loans consolidated, rounded to the nearest higher one-eighth 
     of 1 percent; or
       ``(B) 8.25 percent.''.
       (2) Conforming amendment.--Section 428C(c)(1)(A) of such 
     Act (20 U.S.C. 1078-3(c)(1)(A)) is amended to read as 
     follows:
       ``(1) Interest rate.--(A) Notwithstanding subparagraphs (B) 
     and (C), with respect to any loan made under this section for 
     which the application is received by an eligible lender--
       ``(i) on or after October 1, 1998, and before July 1, 2006, 
     the applicable interest rate shall be determined under 
     section 427A(k)(4); or
       ``(ii) on or after July 1, 2006, the applicable interest 
     rate shall be determined under section 427A(l)(3).''.
       (b) Direct Loans Fixed Interest Rates.--
       (1) Technical correction.--Paragraph (6) of section 455(b) 
     of the Higher Education Act of 1965 (20 U.S.C. 1087e(b)), as 
     redesignated by section 8301(c)(1) of the Transportation 
     Equity Act for the 21st Century (Public Law 105-178; 112 
     Stat. 498) is redesignated as paragraph (9) and is 
     transferred to follow paragraph (7) of section 455(b) of the 
     Higher Education Act of 1965.
       (2) Amendments.--Section 455(b) of the Higher Education Act 
     of 1965 (20 U.S.C. 1087e(b)) is amended--
       (A) by redesignating paragraph (7) as paragraph (8); and
       (B) by inserting after paragraph (6) the following new 
     paragraph:
       ``(7) Interest rate provision for new loans on or after 
     july 1, 2006.--
       ``(A) Rates for fdsl and fdusl.--Notwithstanding the 
     preceding paragraphs of this

[[Page 26292]]

     subsection, for Federal Direct Stafford Loans and Federal 
     Direct Unsubsidized Stafford Loans for which the first 
     disbursement is made on or after July 1, 2006, the applicable 
     rate of interest shall be 6.8 percent on the unpaid principal 
     balance of the loan.
       ``(B) PLUS loans.--Notwithstanding the preceding paragraphs 
     of this subsection, with respect to any Federal Direct PLUS 
     loan for which the first disbursement is made on or after 
     July 1, 2006, the applicable rate of interest shall be 7.9 
     percent on the unpaid principal balance of the loan.
       ``(C) Consolidation loans.--Notwithstanding the preceding 
     paragraphs of this subsection, any Federal Direct 
     Consolidation loan for which the application is received on 
     or after July 1, 2006, shall bear interest at an annual rate 
     on the unpaid principal balance of the loan that is equal to 
     the lesser of--
       ``(i) the weighted average of the interest rates on the 
     loans consolidated, rounded to the nearest higher one-eighth 
     of one percent; or
       ``(ii) 8.25 percent.''.
       (c) Extension of Current Interest Rate Provisions for Three 
     Years.--Sections 427A(k) and 455(b)(6) of the Higher 
     Education Act of 1965 (20 U.S.C. 1077a(k), 1087e(b)(6)) are 
     each amended--
       (1) by striking ``2003'' in the heading and inserting 
     ``2006''; and
       (2) by striking ``July 1, 2003,'' each place it appears and 
     inserting ``July 1, 2006,''.

     SEC. 2. EXTENSION OF SPECIAL ALLOWANCE PROVISION.

       Section 438(b)(2)(I) of the Higher Education Act of 1965 
     (20 U.S.C. 1087-1(b)(2)(I)) is amended--
       (1) by striking ``, and before july 1, 2003'' in the 
     heading;
       (2) by striking ``and before July 1, 2003,'' each place it 
     appears, other than in clauses (ii) and (v);
       (3) by striking clause (ii) and inserting the following:
       ``(ii) In school and grace period.--In the case of any 
     loan--

       ``(I) for which the first disbursement is made on or after 
     January 1, 2000, and before July 1, 2006, and for which the 
     applicable rate of interest is described in section 
     427A(k)(2); or
       ``(II) for which the first disbursement is made on or after 
     July 1, 2006, and for which the applicable rate of interest 
     is described in section 427A(l)(1), but only with respect to 
     (aa) periods prior to the beginning of the repayment period 
     of the loan; or (bb) during the periods in which principal 
     need not be paid (whether or not such principal is in fact 
     paid) by reason of a provision described in section 
     427(a)(2)(C) or 428(b)(1)(M);

     clause (i)(III) of this subparagraph shall be applied by 
     substituting `1.74 percent' for `2.34 percent'.'';
       (4) in clause (iii), by inserting ``or (l)(2)'' after 
     ``427A(k)(3)'';
       (5) in clause (iv), by inserting ``or (l)(3)'' after 
     ``427A(k)(4)'';
       (6) in clause (v)--
       (A) in the heading, by inserting ``before july 1, 2006'' 
     after ``plus loans''; and
       (B) by striking ``July 1, 2003,'' and inserting ``July 1, 
     2006,'';
       (7) in clause (vi)--
       (A) by inserting ``or (l)(3)'' after ``427A(k)(4)'' the 
     first place it appears; and
       (B) by inserting ``or (l)(3), whichever is applicable'' 
     after ``427A(k)(4)'' the second place it appears; and
       (8) by adding at the end the following new clause:
       ``(vii) Limitation on special allowances for plus loans on 
     or after july 1, 2006.--In the case of PLUS loans made under 
     section 428B and first disbursed on or after July 1, 2006, 
     for which the interest rate is determined under section 
     427A(l)(2), a special allowance shall not be paid for such 
     loan during any 12-month period beginning on July 1 and 
     ending on June 30 unless--

       ``(I) the average of the bond equivalent rates of the 
     quotes of the 3-month commercial paper (financial), as 
     published by the Board of Governors of the Federal Reserve 
     System in Publication H-15 (or its successor), for the last 
     calendar week ending on or before such July 1; plus
       ``(II) 2.64 percent,

     exceeds 9.0 percent.''.

  Mr. JOHNSON. Mr. President, today the Senate passed S. 1762, a bill I 
introduced to improve the formula for student loan interest rates and 
to ensure the long-term viability of the student loan program. I am 
pleased the Senate unanimously agreed to this important legislation and 
I am proud to have worked with both students and lenders and my 
colleagues on the Health, Education, Labor, and Pensions Committee, 
especially Chairman Kennedy and Ranking Member Gregg, as well as 
Majority Leader Daschle, in passing this monumental legislation.
  All across America, millions of young people are preparing to apply 
to college. These teenagers are dreaming not only of the college 
experience they are about to embark upon, but also of graduating to 
become teachers, doctors, engineers, and even public servants. Thanks 
to the national education loan program, the educational and career 
aspirations of students and their families can become reality.
  We know that the future of our Nation lies in educating the next 
generation of young people so that each of them can realize the promise 
of America. For 35 years, we have invested in our future by opening the 
doors of colleges and universities to the broadest cross-section of our 
citizens at the lowest possible cost. That is why passing this 
legislation was crucial to ensure that education loans are available to 
help future generations of students, workers, and their families climb 
the ladder of economic opportunity.
  Since 1965, a partnership of students, workers, their families, 
educational institutions, lenders, and the Federal Government has 
opened the doors of educational opportunity for more than 50 million 
Americans. By any measure, the education loan program is a winning 
investment for our Nation.
  Education loans are good investments in our economy and in our 
citizens. As I travel across South Dakota, educators, employers, and 
students tell me how valuable a college degree is in today's economy. 
Indeed, we know that graduates with college degrees earn an average of 
80 percent more than individuals with only a high school diploma. Over 
a lifetime, the earnings difference between individuals with high 
school and college degrees can be more than $1 million. At a time when 
many workers are losing their jobs through no fault of their own, 
education loans are critical tools that can empower these workers to 
upgrade their skills. As we search for ways to expand our economic 
prosperity, we must preserve this important investment in the future of 
our Nation.
  Congress has now taken the initiative to ensure that future 
generations have access to the college or university of their choice by 
enacting a permanent solution to the interest rate issue. Again, I 
thank my colleagues on both sides of the aisle for their support in 
passing this critically important legislation of which we can all be 
proud.

                          ____________________