Washington, DC (April 9, 2008) – Rep. Rubén Hinojosa (D-TX), chairman of the House Subcommittee on Higher Education, Lifelong Learning, and Competitiveness, released the following statement in support of H.R. 5715, the Ensuring Continued Access to Student Loans Act. Today, the House Education and Labor Committee approved the bipartisan legislation that would ensure that turmoil in the U.S. credit markets does not prevent students or parents from accessing federal student loan programs.
“Today, the Education and Labor Committee sent a clear message to students, families, colleges and universities, and the student loan industry: we will not allow the credit crisis in the financial markets to jeopardize the federal student loan programs. Millions of Americans rely on student loans to achieve a college education. The Ensuring Continued Access to Student Loans Act of 2008 signals that federal government will be prepared to use all of the tools at its disposal to ensure that the sub prime mortgage crisis does not precipitate a college access crisis.
“The credit crisis has dramatically decreased the availability and increased the cost of private loans, which many students and families have used to bridge the gap between their federal student aid and the actual cost of college. The Ensuring Continues Access to Student Loans Act of 2008 addresses this problem by increasing the amount that students may borrow under the unsubsidized federal student loan program. This legislation also eases access to and repayment for PLUS loans for parents.
“Lack of liquidity in the financial markets is threatening the ability of lenders in the student loan program to make loans. H.R. 5715 focuses on two mechanisms to ensure no student is denied a federal student loan because of a lack of available lenders. First, this legislation clarifies that the Secretary may advance funding to guaranty agencies in the student loan program so that, if called upon, they will be able to fulfill their role as lender of last resort as required under the Higher Education Act. Second, this legislation gives the Secretary temporary authority to purchase student loans and provide an avenue for liquidity for lenders in the federal student loan programs.
“These efforts represent the tools at the disposal of the Education and Labor Committee. However, more can and should be done. That is why the Ensuring Continued Access to Student Loans Act includes a Sense of Congress that calls upon Federal Financial Institutions, such as the Federal Reserve, and the Department of Treasury to use their authority to help ease the crisis in liquidity in the student loan marketplace.
“The challenges facing the student loan market place are not the result of lack standards or poor judgment by borrowers or lenders. Student loans are a solid investment. For individuals, a college education means higher earnings, greater career opportunities, and a better quality of life. For financial institutions, federal student loans are a sure bet. They carry a 97 percent guaranty from the federal government and default rates remain at historic lows.
“Today, on a bipartisan basis, the Education and Labor Committee took steps to restore confidence in the federal student loans programs for all stakeholders in the higher education community. In approving the Ensuring Continues Access to Student Loans Act of 2008, we will ensure that the federal student loan programs will be able to weather the storm in the financial markets and that no student will be denied a college education because of an inability to secure a federal student loan.
“I am proud to be an original cosponsor of this legislation and look forward to working with my colleagues to move it quickly through the legislative process and to the President’s desk.”
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