Shea-Porter Votes to Advance Bill to Ensure Continued Access to Student Loans for American Families

Press Release

Shea-Porter Votes to Advance Bill to Ensure Continued Access to Student Loans for American Families

Congresswoman Carol Shea-Porter this week joined a bipartisan majority in the House Education and Labor Committee to approve a bill 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.

"Having a college education is critical to getting a good job, especially when the economy is struggling," said Congresswoman Shea-Porter. "This bill will help protect students and families from the effects of the credit crisis and make sure that financial aid remains available to students who need it."

Congresswoman Shea-Porter is an original co-sponsor of the Ensuring Continued Access to Student Loans Act of 2008 (H.R. 5715). The legislation would provide new protections, in addition to those already under current law, 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 in the federally guaranteed student loan programs to substantially reduce their lending activity.

Specifically, 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 all students, and by increasing the aggregate (the total loan limit over the course of a student's education) loan limits to $31,000 for dependent undergraduates and $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 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;
* 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; and
* Include a Sense of Congress that calls on federal financial institutions, including the Federal Financing Bank, to consider using their current authorities to inject liquidity into the student loan marketplace at no cost to the taxpayer to ensure students and parents continue to have access to low-cost federal loans.

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