Washington, D.C. - Congressman Brian Higgins (NY-27) today voted with his colleagues in the House of Representatives to pass H.R. 5715, the Ensuring Continued Access to Student Loans Act of 2008. The bipartisan bill is designed 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 bill, which carries no new cost for taxpayers, passed overwhelmingly by a vote of 383-27.
“College-bound students and their families are making decisions right now about what school they will attend this fall, and are relying on federal aid to be able to afford the skyrocketing cost of higher education. We need to make sure that the promise of a good higher education remains alive and that the cost of college will not break the bank of students after they graduate. Given the economic strain our country is currently facing, this legislation could not come at a more crucial time,” Higgins said.
The recent turmoil in the U.S. credit markets has made it difficult for some lenders in the federally guaranteed student loan program to secure the capital needed to finance college loans, leading some lenders to pull out of the student loan market. While no student or college has reported any problems accessing federal student aid to date, current market instability has made it important to take extra steps to ensure that students and families continue to have access to federal college aid.
“This legislation provides new protections to go along with the federal loan safeguards that already exist and will help make sure that students and families will continue to be able to access the low-cost loans they need to finance their college education, regardless of what’s happening in the credit markets,” said Higgins.
H.R. 5715 would increase the annual loan limits on federal unsubsidized student loans by $2,000 for all students, and increase the aggregate loan limits (the total loan limit over the course of a student’s education) to $31,000 for dependent undergraduates and to $57,500 for independent undergraduates. Under current law, dependent undergraduate students can currently borrow up to $23,000 in total federal student loans (both subsidized and unsubsidized) and independent undergraduates can borrow up to $46,000 in total loans during the course of their education.
“Families and students should not be forced to rely on high interest private loans just to get an education- this increase will encourage more practical and responsible borrowing,” Higgins said.
Additionally, H.R. 5715 would:
· 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 homeowners pay for college by making sure that short-term delinquencies in mortgage payments don’t prohibit otherwise eligible parents from being able to borrow parent PLUS loans. Under current law, parents with an adverse credit history are ineligible to receive a parent PLUS loan, except under extenuating circumstances. The legislation would temporarily classify as an extenuating circumstance delinquencies on home mortgages of up to 180 days, therefore making it possible for parents who are being strained by the current housing market to secure loans for their children;
· Clarify that existing law gives the U.S. Education Secretary the authority to advance federal funds to guaranty agencies in the event that they do not have sufficient capital to originate new loans, and allow guaranty agencies to carry out the functions of lender of last resort on a school-wide basis. Under the Higher Education Act, these guaranty agencies are obligated to serve as a nationwide network of lenders of last resort if requested to do so by the Education Secretary; and
· 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.