WASHINGTON, DC -- The U.S. House of Representatives today gave final approval to legislation to ensure that the turmoil in the U.S. credit markets does not prevent any students or parents from accessing the financial aid they need to pay for college. The bipartisan bill will now be sent to the President’s desk for his signature.
The Ensuring Continued Access to Student Loans Act of 2008 (H.R. 5715), would provide new protections, in addition to those already under current law, to ensure that families continue to have timely, uninterrupted access to federal college loans in the event that stress in the credit markets leads a significant number of lenders in the federally guaranteed student loan programs to substantially reduce their lending activity. The bill carries no new cost for taxpayers.
“Today’s vote will help ensure that students’ dreams of going to college aren’t sidelined by the turmoil in the credit markets,” said U.S. Rep. George Miller (D-CA), the chairman of the House Education and Labor Committee, and one of the bill’s authors. “I urge the President to quickly sign this bill into law.”
“By acting quickly to restore confidence to an uncertain marketplace, the bill approved today marks a critical first step toward averting a crisis in our student loan programs,” said U.S. Rep. Howard P. “Buck” McKeon (R-CA), the panel’s senior Republican. “In the coming weeks and months, Congress will be vigilant in monitoring student access to financial aid to ensure that disturbances in the credit markets do not limit college access and opportunity.”
“Today is the day that many incoming freshman must decide which college they will attend in the fall. Financial aid plays a critical role in this decision and it’s important to reassure families that the tumultuous economy will not affect their access federal aid,” said U.S. Rep. Rubén Hinojosa (D-TX), the Chairman of the House Subcommittee on Higher Education, Lifelong Learning, and Competitiveness. “This timely legislation puts safeguards in place so that no student will ever forgo a college education because of an inability to secure a federal student loan.”
“Millions of students and families are depending on us to pass this legislation and restore stability to a program that plays a critical role in paying for college,” said U.S. Rep. Ric Keller (R-FL), the Subcommittee’s senior Republican. “Today we made clear that Congress will not stand by and allow a student loan crisis to develop.”
In recent months, the crisis in the nation’s credit markets has made it difficult for some lenders that participate in the federally guaranteed student loan program to secure the capital needed to finance their student lending activity. As a result, some lenders have announced plans to scale back their lending activities; although others have announced plans to increase their share of loans. To date, no students or parents have run into problems in getting the federal student aid they are eligible to receive.
H.R. 5715 would:
- Reduce borrowers’ reliance on costlier private college loans by increasing the annual loan limits on federal college loans by $2,000 for all students;
- Give parent borrowers more time to begin paying off their federal PLUS loans by providing them with the option to defer repayment until up to six months after their children leave school – giving families more flexibility in hard economic times;
- Help struggling families pay for college by ensuring that short-term delinquencies in mortgage payments and medical bills don’t prohibit otherwise eligible parents from being able to borrow parent PLUS loans;
- Give the U.S. Education Secretary the temporary authority to purchase loans from lenders in the federal guaranteed loan program, ensuring that lenders continue to have access to capital to originate new loans. The Education Department would be authorized to purchase loans only if doing so would not result in a net cost for the federal government;
- Provide additional relief to students by directing all savings generated by this legislation into federal grants for low- and moderate-income students who pursue majors in science, math, engineering, technology, or critical foreign languages;
- Clarify that existing law gives the U.S. Education Secretary the authority to advance federal funds to certain lenders and guaranty agencies acting as lenders of last resort in the event that they do not have sufficient capital to originate new loans;
- Protect the interests of student and parent borrowers by ensuring that loans made through the lender-of-last-resort program are made with similar terms and conditions as are loans made through the federally guaranteed student loan program; and by ensuring that guaranty agencies and lenders operating as lenders of last resort are subject to the same rules regarding inducements as are lenders in the federally guaranteed student loan programs; and
- Include a Sense of Congress that calls on federal financial institutions, including the Federal Financing Bank, to consider using their current authorities to inject liquidity into the student loan marketplace at no cost to the taxpayer to ensure students and parents continue to have access to low-cost federal loans.
The House had initially approved this legislation earlier this month; the final version passed today includes amendments added by the Senate.
This legislation is supported by student groups, including the U.S. PIRGs Higher Education Project and the United States Students Association. To see their letter of support, click here.
For a fact sheet on this legislation, click here. For a separate list of the amendments added by the Senate, click here.
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