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

WASHINGTON, D.C. – Following a unanimous vote in the U.S. House Education Committee in favor of bipartisan legislation to ensure access to low-cost federal student loans, the panel’s senior Republican called for swift action on that and other measures aimed at maintaining stability in the student loan program amid broader uncertainties in the financial markets. The bill approved today is the Ensuring Continued Access to Student Loans Act of 2008 (H.R. 5715), introduced by Reps. George Miller (D-CA) and Howard P. “Buck” McKeon (R-CA), the chairman and senior Republican of the U.S. House Committee on Education and Labor.

“Today Congress is sending a powerful signal that it remains committed to a strong and stable federally guaranteed student loan program that will provide uninterrupted access to low-cost loans for millions of students and families,” said McKeon.  “The House and Senate must act quickly to pass this legislation and send it to the President in order to restore confidence in the market, increase liquidity, and provide new protections and benefits to borrowers.”

“We must not allow the larger problems with the U.S. economy to affect families’ ability to access the federal financial aid they depend on to pay for college,” said Miller. “It’s good news that, so far, the turmoil in the credit markets hasn’t kept any students from getting federal college aid, but we need to provide families with every assurance that this will continue to be the case heading into the fall. This legislation, along with the federal loan safeguards that already exist, will help ensure that students and families will continue to be able to access the low-cost loans they need for college, regardless of what’s happening in the credit markets.”

McKeon and Miller were joined by Reps. Rubén Hinojosa (D-TX) and Ric Keller (R-FL), chairman and senior Republican of the Subcommittee on Higher Education, Lifelong Learning, and Competitiveness, in crafting the bill to protect federal student loan borrowers from weaknesses in the broader credit markets.

“We’re taking positive steps to make sure all students have access to low-interest student loans despite the recent turmoil in the financial markets,” said U.S. Rep. Ric Keller (R-FL), the Senior Republican on the higher education subcommittee.

“We have taken critical steps today toward ensuring that the credit crisis in the financial markets does not jeopardize our federal student loan programs,” said U.S. Rep. Rubén Hinojosa, the chair of the House Subcommittee on Higher Education, Lifelong Learning, and Competitiveness. “This legislation signals that federal government is prepared to use all the tools at its disposal to make certain that the subprime mortgage crisis does not trigger a college access crisis.” 

The Ensuring Continued Access to Student Loans Act of 2008 (available online here) 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.

A copy of McKeon’s opening statement delivered during today’s Education and Labor Committee markup is available online here.

#####