Congressman Dale E. Kildee (D-MI) today joined a bipartisan majority in the U.S. House of Representatives to approve legislation that would protect from turmoil in the U.S. financial markets students and families who depend on federal student loans to pay for college. H.R. 5715, The Ensuring Continued Access to Federal Student Loans Act of 2008, which carries no new cost for taxpayers, was passed by a vote of 383-27.
"A college education is essential to developing a talented workforce that attracts new industry," said Kildee. "Through hard economic times, we must maintain access to higher education. The young professionals who enter the workforce today will be critical to the future success of Michigan commerce and manufacturing."
The Ensuring Continued Access to Student Loans Act would provide new protections to ensure that families continue to have timely, uninterrupted access to federal college loans in the event that stress in the credit markets leads a significant number of lenders to substantially reduce their activity in the federally guaranteed student loan program.
H.R. 5715 would:
- Reduce borrowers' reliance on costlier private college loans by increasing the annual loan limits on federal college loans by $2,000 for undergraduate students, and by increasing the aggregate loan limits to $31,000 for dependent undergraduates and to $57,500 for independent undergraduates;
- 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 ensuring that short-term delinquencies in mortgage payments and medical bills 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 and medical bills, 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.