House Committee on Education and Labor
U.S. House of Representatives

WASHINGTON, D.C. – In response to growing uncertainty in the student loan financial markets, key members of Congress today introduced bipartisan legislation to ensure students and families continue to have access to low-cost federal student loans.  Rep. Howard P. “Buck” McKeon (R-CA), the U.S. House Education and Labor Committee’s Senior Republican, joined Rep. George Miller (D-CA), the panel’s Chairman, and Rep. Rubén Hinojosa (D-TX), Chairman of the subcommittee with jurisdiction over higher education programs, in introducing H.R. 5715, the Ensuring Continued Access to Student Loans Act of 2008.  McKeon issued the following statement: 

“The turmoil in our nation’s financial markets has spread to the federal student loan program, creating uncertainty among students and families preparing for the coming school year.  Congress has an obligation to act quickly in the face of these challenges to restore market confidence and assist those borrowers grappling with a weakened economy. 

“The Ensuring Continued Access to Student Loans Act represents the first concrete, legislative steps to address weaknesses in the student loan market.  Though it is not the final word on market restoration, this bill will begin to restore investor confidence, address liquidity shortages, and most importantly, provide assistance to student and parent borrowers. 

“Market instability coupled with the deep funding cuts enacted last year has created a perfect storm for the student loan programs in which investor confidence has been shaken and program viability has been called into question.  Although I continue to harbor serious concerns about the reduction in federal support for student loans, I believe the legislation introduced today will send a powerful signal that Congress continues to support a strong, stable student loan program now and into the future.  I look forward to continuing to work with Chairman Miller to ensure the interests of students and families are protected in these uncertain economic times.”

NOTE:  The Ensuring Continued Access to Student Loans Act of 2008 contains reforms developed on a bipartisan basis to respond to student loan market instability.  Those include:

• Efforts to inject liquidity and restore investor confidence in the marketplace by 1) authorizing the Department of Education to purchase student loans or commit to purchasing them in the future so that loan providers can continue to fulfill the needs of borrowers, and 2) urging federal financial institutions, including the Federal Financing Bank (FFB), to exercise their authority to assist lenders in maintaining student loan availability in the coming academic year and beyond;
• New flexibility for parents provided through a new, optional grace period that permits parents to defer PLUS loan payments until after their children graduate, as well as efforts to ensure parents struggling with the difficulties in the mortgage market are not automatically denied the chance to help pay for their children’s education through PLUS loans;
• Expanded loan availability through higher unsubsidized Stafford loan limits, allowing students to receive more federal funding, which in turn should help reduce reliance on higher cost private loans; and
• Additional clarity on how the Lender of Last Resort program can operate, particularly with respect to easing participation for students and schools and ensuring funds will be available should they become necessary.

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