College Opportunity and Affordability Act of 2007

Floor Speech

I want to commend the committee, especially Chairman Miller, Ranking Member McKeon, and all of the members, actually, of the committee, for such an outstanding bill.

In particular, I want to thank the committee for its consideration of items and issues of particular interest to me, students with disabilities, the handling of Pell Grants and student loans, veterans and their needs, especially those who are returning, and the efforts to strengthen the Historically Black Colleges and Universities so that those institutions can have master's degree programs that allow students access to them. It's an outstanding bill; and, again, I commend Chairman Miller and Ranking Member McKeon for an outstanding piece of legislation.

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Madam Chairman, I yield myself 2 minutes.

Unlike most kinds of debt, student loans of all types are currently nondischargeable in bankruptcy, except on a judicial finding of undue hardship. Under this amendment, government student loans, Federal and State, and loans made directly by nonprofit entities would remain nondischargeable. Other student loans made by for-profit banks and other lenders would continue to be nondischargeable for the first 5 years after they come due, but after that, they would be treated like other unsecured consumer loans in bankruptcy.

This amendment also closes the loophole that lenders were beginning to pursue just before the 2005 changes went into effect. Currently, loans that are funded in whole or in part by a nonprofit institution are nondischargeable. Lenders offering private student loans were setting up affiliations with nonprofit institutions in order to take advantage of this loophole, even though the nonprofit was not the source of funding.

The current law is unfair to students. Students who take out student loans are trying to better themselves and contribute to the advancement of our economy. Unlike Federal student loans, private loans lack basic consumer protections, such as limits on interest rates, loan limits, and flexible payments; yet the bankruptcy law treats student loan borrowers who face financial tragedy in the same severe manner as people trying to escape child support payments, alimony, overdue taxes, and criminal fines. People should not be punished for trying to get an education.

Madam Chairman, I reserve the balance of my time.

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Madam Chairman, I yield myself the balance of our time.

For many of these students who secure loans without the protection of bankruptcy, it's like receiving a life sentence with no appeal. That is to say, they get a loan that is supposed to help them get a college degree, an education so that they can pay the loan off. Unfortunately, many of them are stuck on $70,000, $80,000, $90,000, $100,000 that they're never able to pay. And so they struggle along for the rest of their lives trying to pay off a loan that was supposed to have secured for them a level of financial ability.

I would urge that we pass this amendment to give those hundreds and thousands of students throughout the country the simple protection of bankruptcy that is provided for individuals with any other consumer loan.

Madam Chairman, I yield back the balance of my time.

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