House Votes to Extend Student Loan Access Protections at No Cost to Taxpayers

By Betsy Miller Kittredge on 09-16-2008, 02:22 PM in

The House of Representatives yesterday approved bipartisan legislation to further ensure that turmoil in the U.S. credit markets will not prevent students and families from accessing the financial aid they need to pay for college. The legislation extends for one year certain provisions of the Ensuring Continued Access to Student Loans Act of 2008, which were due to expire on July 1, 2009.

The House overwhelmingly passed the bill, H.R. 6889, by a vote of 368 to 4. Specifically, the legislation would extend provisions that provide the U.S. Secretary of Education with the additional tools needed to safeguard federal student loans by purchasing loans from lenders in the federal student loan programs in the event that those lenders were unable to access the capital needed to finance their lending activity. Like the original legislation, this bill carries no new cost for taxpayers.

H.R. 6889 would extend, for one year:

The temporary authority given to the U.S. Education Secretary to purchase loans from lenders in the federally guaranteed loan program, ensuring that lenders continue to have access to capital to originate new loans, if there was a determination that lenders were unable to meet demand for 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; and
The authority to allow guaranty agencies to carry out the functions of lenders of last resort on a school-wide basis. Under existing law, these guaranty agencies are obligated to serve as lenders of last resort to prevent any possible problem in access to student loans.

Last spring, Congress first passed the Ensuring Continued Access to Student Loans Act of 2008, after turmoil in the nation’s credit markets 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.

“At a time when our rough economy is already dealing a huge blow to American families, we can’t allow trouble in the credit markets to further price students out of a college degree. With market turbulence showing no signs of letting up, it’s only prudent to make sure that students have every assurance that the federal student loans they need will be there next year.” -- Chairman George Miller

“Come spring, students and families will be making their plans for the next academic year. It is critical that we extend the authority for the Secretary to purchase student loans to avoid any uncertainty about the access to this critical source of student financial aid. “It would be a tragedy for a student to decide to forgo or postpone college because of a fear of not being able to get a federal student loan.” -- Rep. Rubén Hinojosa, Chairman of the Subcommittee on Higher Education, Lifelong Learning and Competitiveness