By a vote of 383 to 27 the House of Representatives overwhelmingly passed the Ensuring Continued Access to Student Loans Act of 2008 (H.R. 5715) yesterday afternoon. The bill seeks to eliminate the possibility of disruptions in federal student loans this coming academic year by making several changes to the loan programs and creating additional backstops to provide liquidity in the federal student loan marketplace.
"This is a great step forward in ensuring that students and parents see no disruptions in their federal student loans this year," said NASFAA President and CEO Dr. Phil Day. "We worked closely with Congress on several of these issues and we're proud to see them come to fruition in such a bipartisan way."
"We urge the Senate to push forward with S. 2815 so that we can continue to move in the right direction to ensure no disruptions for students," Day added. The Senate bill (S. 2815) would mirror much of the House bill, but would also add $750 to the maximum Pell Grant awards for students with negative expected family contributions. It has not yet been considered in the Senate education committee, but Congressional Quarterly reports that the bill's author, Sen. Edward Kennedy (D-MA) is seeking to move on the bill quickly.
Congressional leaders on both sides of the aisle praised the House bill and the bipartisan manner in which it was passed.
"At a time when too many Americans are facing severe economic uncertainty, students and families shouldn't have to worry about whether or not the federal student aid they need to help pay for college is in jeopardy," said House education committee Chairman George Miller (D-CA). "With families in the middle of planning their finances for the coming school year, it is critical that we continue to act swiftly on this legislation, and I look forward to working with the Senate and the Administration to help make that happen."
Howard "Buck" McKeon (R-CA), ranking Republican on the House education committee, also voiced strong support for the bill and urged fellow Republicans to do the same. McKeon commended Miller for his leadership on moving the bill forward quickly, before the onset of any disruptions.
"This isn't our normal modus operandi... usually we wait until we're in the middle of a crisis," McKeon observed. "This bill is a first step to prevent a crisis in the student loan program, and its consideration has come not a minute too soon."
McKeon's comments echo those made by Day earlier this week. In a letter to Miller and McKeon earlier this week, Day stated that this legislation could do much to bolster confidence in the system, possibly making the safety nets in the bill moot.
"While we believe we must have in place the legislative solutions that H.R. 5715 provides so that federal agencies have the necessary guidance and tools to avert any credit crisis, it is NASFAA's fervent hope that such tools may never be needed," wrote Day.
The passage of the bill is punctuated by recent announcements by more lenders this week who are curtailing or halting their participation in FFELP. The Michigan and Massachusetts loan agencies announced suspensions in their federal student loan programs earlier this week and Citibank and Chase both announced controversial cutbacks in limiting which schools they will work with for future federal loans. Meanwhile, Bank of America also announced yesterday that it was pulling back on private student loans to focus on federal student loans.
Summary of Amendments
Thirteen amendments were submitted to the House Rules Committee, but only four were ruled in order for consideration. The following amendments were accepted and adopted by the House.
Manager's Amendment submitted by George Miller (D-CA):The Manager's amendment makes technical and conforming changes to the bill. It also makes the following changes:
- Reduces the increase in unsubsidized Stafford loan limits for graduate or professional students to $12,000
- Allows up to 89 days delinquency on the repayment of "any other debt" as an extenuating circumstance for parents seeking PLUS loans (H.R. 5715 already specifies that mortgage loan payments delinquent up to 180 days will qualify as an extenuating circumstance.)
- Specifies that the Secretary of Education shall determine whether institutions qualify to participate in lender of last resort (LLR). Institutions must meet a "minimum threshold" determined by the Secretary before qualifying for institution-wide LLR participation.
- Specifies that forward purchasing agreements from the Department should be used "to ensure continued participation" in the FFEL Program.
- Allows lenders to continue servicing loans purchased by the Secretary as long as the cost does not exceed the cost the Department would otherwise incur for servicing those loans
Prohibited Inducements in LLR Program submitted by Thomas Petri (R-WI):
The amendment prohibits guaranty agencies from using prohibited inducements to expand their loan volume while using lender of last resort.
Impact Study on College Costs submitted by Mike Castle (R-DE) and Peter Welch (D-VT):
This amendment requires the General Accountability Office (GAO) to conduct a study of the impact of raising loan limits on (1) tuition, fees, and room and board at institutions of higher education; and (2) private loan borrowing for attendance at institutions of higher education. The report would be due to the House and Senate education committees within one year after the bill becomes law.
Medical Bill Delinquencies as Extenuating Circumstances submitted by Kathy Castor (D-FL):
For loans made between July 1, 2008 and June 30, 2009, the amendment would temporarily classify medical bill payment delinquencies of up to 180 days as an extenuating circumstance which shall not interfere with parents' ability to receive PLUS loans.
Additional Resources & Media Coverage
By Justin Draeger
NASFAA Assistant Director for Communications
Posted 04/18/08 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web Site questions or comments to Web@NASFAA.org.
