Chairman Miller Statement on Administration’s Proposals to Increase Liquidity in Student Loan Marketplace

Wednesday, May 21, 2008

WASHINGTON, DC -- U.S. Rep. George Miller (D-CA), the chairman of the House Education and Labor Committee, issued the following statement today after the U.S. Department of Education unveiled proposals to implement a provision of the newly enacted Ensuring Continued Access to Student Loans Act (H.R. 5715) that allows the government to purchase federally guaranteed student loans from lenders as long as there is no new cost to taxpayers. Miller is the author of the law.

“The proposed actions outlined by the Department reflect a thoughtful approach to implementing a key provision in our legislation to address the liquidity issues facing some lenders, at no additional cost to taxpayers. To date, no student has been unable to get the federal loans for which they are eligible, and we’re confident that as long as the Department does its job, that will continue to be the case.”

BACKGROUND

In recent months, turmoil 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. So far no student or college has been unable to access federal student loans, and Congress has been spearheading efforts to make sure that remains the case.

H.R. 5715 provides new protections, in addition to those in current law, to ensure that students and families have continued access to federal college loans. The law addresses the liquidity problems facing some lenders as a result of the tightening in the credit markets by giving the U.S. Secretary of Education the authority to purchase loans from lenders that are unable to meet the demand for loans. More information is below.

• Congress is monitoring the Department of Education’s implementation of H.R. 5715

Last week, Chairman Miller and Senator Edward M. Kennedy (D-MA), the chairman of the Senate Health, Education, Labor, and Pensions Committee, sent a letter to the U.S. Government Accountability Office asking the agency to oversee the Bush administration’s implementation of the law and efforts to fully prepare already-existing contingency plans (the Direct Loan Program and the lender-of-last-resort program).

• H.R. 5715 will carry no additional cost for American taxpayers

The law requires that the Secretary only purchase loans from lenders in a manner that carries no cost for the federal government. The Office of Management and Budget is currently working with the Department to ensure that the two proposals released by the administration to increase liquidity in the student loan marketplace meet this requirement.
 

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