Student Loan Blog : U.S. House of Representatives

Student Loan Providers May Get Government Help for One More Year

Student Loan Girl — Thu, 18 Sep 2008 00:08:00 GMT

With problems in the credit markets continuing to plague student loan providers, the U.S. House of Representatives overwhelmingly approved a year-long extension of the Ensuring Continued Access to Student Loans Act, which allows the secretary of education to buy student loans from cash-strapped lenders.

If approved by the Senate, the measure, which Congress originally passed last spring, would extend the education secretary’s loan purchasing power through July 1, 2010 to help ensure that students have access to federal student loans for the 2009–10 academic year. The bill was set to expire July 1, 2009.

The act gives the Department of Education the authority to buy student loans from third-party private lenders in the Federal Family Education Loan Program who have been unable to sell their loans to investors following fallout from the subprime mortgage crisis.

“Our rough economy is already dealing a huge blow to American families and we can’t allow trouble in the credit markets to further price students out of a college degree,” said Rep. George Miller, D-Calif., chairman of the Committee on Education and Labor (“House Moves to Protect Student Loans,” Associated Press, Sept. 15, 2008).

“With market conditions showing no signs of letting up,” Miller added, “it’s only prudent to make sure that students have every assurance that the federal student loans they need will be there next year.”

The measure would also extend the secretary’s authority to advance federal funds to guarantee agencies so those agencies can make loans, if necessary, as a “lender of last resort” for the nation’s colleges and universities.

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New Higher-Ed Bill May Get Through Congress This Week

Student Loan Girl — Thu, 31 Jul 2008 01:54:00 GMT

Five years overdue, the House and the Senate may finally reach a compromise on the re-authorized Higher Education Act, the law that predominantly governs student aid, according to an article in The Chronicle of Higher Education (“With Compromises, Higher-Ed Bill Could Move Through Congress This Week,” July 28, 2008).

If the bill makes it out of the House education committee, it would then have to get a majority vote in both the full House and Senate before the bill is sent to the president, which legislators hope to do before Congress breaks for its August recess next week.

Legislators, however, must first agree on two major sticking points: how to structure a new program that would provide graduate education grants to schools that enroll a large number of African American students, and whether states should be penalized if they reduce the amount of funds they allocate for higher education in their annual budgets.

Legislators Close to Resolution on Two Main Issues

On July 25, legislators said that they had come to an agreement on the graduate grant-program provision. Under the negotiated agreement, both predominately black institutions with at least 40 percent black student enrollment, and historically black institutions will be able to benefit from the new grant program. However, the grant will be distributed under two separate programs, one for historically black colleges and universities and one for predominantly black institutions.

Legislators are still negotiating a provision that would require states to increase spending on higher education each year over the next five years.

Although Congress may come to an agreement on the various tenets on the bill before its August recess, if legislators fail to resolve these issues this week, the bill won’t be revisited until after the November presidential election.

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Senator Proposes Penalties for Colleges That Hoard Endowment Funds

Student Loan Girl — Thu, 15 May 2008 18:58:00 GMT

In a recent letter to the U.S. House of Representatives Committee on Ways and Means, Rep. Peter Welch, D-Vermont, proposed restricting IRA rollover contributions to colleges that don’t use their endowments to help low and middle-income students pay for college, according to an article in The Chronicle of Higher Education (“Proposal Would Restrict Certain Gifts to Colleges That Hoard Endowments,” May 13, 2008).

Welch said wealthy colleges, which are among the biggest beneficiaries of those IRA distributions, should be ineligible to receive the perks if schools’ endowments aren’t used to contain college costs for needy students.

He urged the House Ways and Means Committee — which is currently drafting a new tax bill — to include penalties for schools that hoard their endowment assets.

Another proposal by Welch, that would require colleges to spend at least 5 percent of their endowments every year and to annually report how much of their endowment funds have been spent, is part of current House legislation to reauthorize the Higher Education Act.

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