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H.R. 5715 (110th): Ensuring Continued Access to Student Loans Act of 2008


The text of the bill below is as of Apr 17, 2008 (Passed the House).


IB

110th CONGRESS

2d Session

H. R. 5715

IN THE HOUSE OF REPRESENTATIVES

AN ACT

To ensure continued availability of access to the Federal student loan program for students and families.

1.

Short title

This title may be cited as the Ensuring Continued Access to Student Loans Act of 2008.

2.

Increasing unsubsidized Stafford loan limits for undergraduate and graduate students

(a)

Amendments

Subsection (d) of section 428H of the Higher Education Act of 1965 (20 U.S.C. 1078–8(d)) is amended to read as follows:

(d)

Loan limits

(1)

In general

Except as provided in paragraphs (2), (3), and (4), the annual and aggregate limits for loans under this section shall be the same as those established under section 428(b)(1), less any amount received by such student pursuant to the subsidized loan program established under section 428.

(2)

Limits for graduate and professional students

(A)

Annual limits

The maximum annual amount of loans under this section a graduate or professional student may borrow in any academic year (as defined in section 481(a)(2)) or its equivalent shall be the amount determined under paragraph (1), plus—

(i)

in the case of such a student who is a graduate or professional student attending an eligible institution, $12,000; and

(ii)

in the case of a graduate student enrolled in coursework specified in sections 484(b)(3)(B) and 484(b)(4)(B), $7,000;

except in cases where the Secretary determines that a higher amount is warranted in order to carry out the purpose of this part with respect to students engaged in specialized training requiring exceptionally high costs of education, but the annual insurable limit per student shall not be deemed to be exceeded by a line of credit under which actual payments by the lender to the borrower will not be made in any years in excess of the annual limit.
(B)

Aggregate limit

The maximum aggregate amount of loans under this section a student described in subparagraph (A) may borrow shall be the amount described in paragraph (1), adjusted to reflect the increased annual limits described in subparagraph (A), as prescribed by the Secretary by regulation.

(3)

Limits for undergraduate dependent students

(A)

Annual limits

The maximum annual amount of loans under this section an undergraduate dependent student (except an undergraduate dependent student whose parents are unable to borrow under section 428B or the Federal Direct PLUS Loan Program) may borrow in any academic year (as defined in section 481(a)(2)) or its equivalent shall be the sum of the amount determined under paragraph (1), plus $2,000.

(B)

Aggregate limits

The maximum aggregate amount of loans under this section a student described in subparagraph (A) may borrow shall be $31,000.

(4)

Limits for undergraduate independent students

(A)

Annual limits

The maximum annual amount of loans under this section an undergraduate independent student, or an undergraduate dependent student whose parents are unable to borrow under section 428B or the Federal Direct PLUS Loan Program, may borrow in any academic year (as defined in section 481(a)(2)) or its equivalent shall be the sum of the amount determined under paragraph (1), plus—

(i)

in the case of such a student attending an eligible institution who has not completed such student's first 2 years of undergraduate study—

(I)

$6,000, if such student is enrolled in a program whose length is at least one academic year in length; or

(II)

if such student is enrolled in a program of undergraduate education which is less than one academic year, the maximum annual loan amount that such student may receive may not exceed the amount that bears the same ratio to the amount specified in subclause (I) as the length of such program measured in semester, trimester, quarter, or clock hours bears to one academic year;

(ii)

in the case of such a student at an eligible institution who has successfully completed such first and second years but has not successfully completed the remainder of a program of undergraduate education—

(I)

$7,000; or

(II)

if such student is enrolled in a program of undergraduate education, the remainder of which is less than one academic year, the maximum annual loan amount that such student may receive may not exceed the amount that bears the same ratio to the amount specified in subclause (I) as such remainder measured in semester, trimester, quarter, or clock hours bears to one academic year; and

(iii)

in the case of such a student enrolled in coursework specified in sections 484(b)(3)(B) and 484(b)(4)(B), $6,000 for coursework necessary for enrollment in an undergraduate degree or certificate program.

(B)

Aggregate limits

The maximum aggregate amount of loans under this section a student described in subparagraph (A) may borrow shall be $57,500.

(5)

Capitalized interest

Interest capitalized shall not be deemed to exceed a maximum aggregate amount determined under subparagraph (B) of paragraph (2), (3), or (4).

.

(b)

Student eligibility

Loan limit increases authorized by the amendments made by this section shall be available only to students who meet the requirements of section 484(a) of the Higher Education Act of 1965 (20 U.S.C. 1091(a)).

(c)

Effective date

The amendments made by this section shall be effective for loans issued on or after July 1, 2008.

3.

Grace period for parent PLUS loans

(a)

Amendment

Section 428B(d) of the Higher Education Act of 1965 (20 U.S.C. 1078–2(d)) is amended by amending paragraphs (1) and (2) to read as follows:

(1)

Commencement of repayment

Repayment of principal on loans made under this section shall—

(A)

commence not later than—

(i)

60 days after the date such loan is disbursed by the lender, except as provided in clause (ii); and

(ii)

if agreed upon by a parent borrower, the day after 6 months after the date the student for whom the loan is borrowed ceases to carry at least one-half the normal full-time academic workload (as determined by the institution); and

(B)

be subject to deferral during any period during which the graduate or professional student or the parent meets the conditions required for a deferral under section 427(a)(2)(C) or 428(b)(1)(M).

(2)

Capitalization of interest

(A)

In general

Interest on loans made under this section—

(i)

which accrues prior to the beginning of repayment under paragraph (1)(A)(i), shall be added to the principal amount of the loan; and

(ii)

which accrues prior to the beginning of repayment under paragraph (1)(A)(ii) or during a period in which payments of principal are deferred pursuant to paragraph (1)(B) shall, if agreed upon by the borrower and the lender—

(I)

be paid monthly or quarterly; or

(II)

be added to the principal amount of the loan not more frequently than quarterly by the lender.

(B)

Insurable limits

Capitalization of interest under this paragraph shall not be deemed to exceed the annual insurable limit on account of the borrower.

.

(b)

Conforming amendment

Section 428(b)(7)(C) of such Act (20 U.S.C. 1078(b)(7)(C)) is amended by striking , 428B,.

(c)

Effective date

The amendments made by this section shall be effective for loans issued on or after July 1, 2008.

4.

Special rules for PLUS loans

Section 428B(a)(3) of the Higher Education Act of 1965 (20 U.S.C. 1078–2(a)(3)) is amended to read as follows:

(3)

Special rules

(A)

Parent borrowers

Whenever necessary to carry out the provisions of this section, the terms student and borrower as used in this part shall include a parent borrower under this section.

(B)
(i)

Extenuating circumstances

For loans made on or after July 1, 2008, and before July 1, 2009, a lender may determine that extenuating circumstances exist under the regulations promulgated pursuant to paragraph (1)(A) if an applicant for a loan under this section is delinquent for 180 days or less on their home mortgage payments and is not more than 89 days delinquent on the repayment of any other debt.

(ii)

Master calendar inapplicable

Section 482 shall not apply to determinations made under clause (i).

.

5.

Lender-of-last-resort

(a)

In general

Section 428(j) of the Higher Education Act of 1965 (20 U.S.C. 1078(j)) is amended—

(1)

in the first sentence of paragraph (1), by striking students eligible to receive interest benefits paid on their behalf under subsection (a) of this section who are otherwise unable to obtain loans under this part and inserting eligible students and parents who are otherwise unable to obtain loans under this part (except for consolidation loans under section 428C) or who attend an institution of higher education in the State that is designated under paragraph (4);

(2)

in paragraph (2)(B), by inserting , in the case of students and parents applying for loans under this subsection because of an inability to otherwise obtain loans under this part (except for consolidation loans under section 428C), after lender, nor;

(3)

in paragraph (3)(C)—

(A)

in the first sentence, by inserting or designates an institution of higher education for participation in the program under this subsection under paragraph (4) after under this part; and

(B)

in the third sentence, by inserting or to eligible borrowers who attend an institution in the State that is designated under paragraph (4) after problems; and

(4)

by adding at the end the following:

(4)

Institution-wide student qualification

Upon the request of an institution of higher education and pursuant to standards developed by the Secretary, the Secretary shall designate such institution for participation in the lender-of-last-resort program under this paragraph. If the Secretary designates an institution under this paragraph, the guaranty agency designated for the State in which the institution is located shall make loans, in the same manner as such loans are made under paragraph (1), to students and parent borrowers of the designated institution, regardless of whether the students or parent borrowers are otherwise unable to obtain loans under this part (other than a consolidation loan under section 428C).

(5)

Standards developed by the Secretary

In developing standards with respect to paragraph (4), the Secretary may require—

(A)

an institution of higher education to demonstrate that, despite due diligence on the part of the institution, the institution has been unable to secure the commitment of lenders willing to make loans to a significant number of students attending the institution;

(B)

that, prior to making a request under such paragraph for designation for participation in the lender-of-last-resort program, an institution of higher education shall demonstrate that the institution has met a minimum threshold, as determined by the Secretary, for the number or percentage of students at such institution who have received rejections from eligible lenders for loans under this part; and

(C)

any other standards and guidelines the Secretary determines to be appropriate.

.

(b)

Effective date

The amendments made by subsection (a) shall take effect on the date of enactment of this Act.

(c)

Review of inducements limitations

Within 90 days after the date of enactment of this Act, the Secretary of Education shall review, and as necessary revise, the Department of Education’s regulations concerning prohibited guaranty agency inducements to eligible lenders (34 CFR 682.401(e)) to ensure that such agency’s do not engage in improper inducements in the expansion of operations of the lender-of-last-resort program as authorized by the amendments made by this section. The Secretary shall submit a report on the review and revision required by this subsection to the Committee on Education and Labor of the House of Representatives and the Committee on Health, Education, Labor, and Pensions of the Senate within 180 days after such date of enactment.

6.

Mandatory advances

(a)

In general

Section 421(b) of the Higher Education Act of 1965 (20 U.S.C. 1071(b)) is amended—

(1)

in paragraph (4), by striking programs, and and inserting programs,;

(2)

in paragraph (5), by striking agencies. and inserting agencies, and; and

(3)

by adding at the end the following:

(6)

there is authorized to be appropriated, and there are appropriated, out of any money in the Treasury not otherwise appropriated, such sums as may be necessary for the purpose of carrying out section 422(c)(7).

.

(b)

Effective date

The amendments made by subsection (a) shall take effect on the date of enactment of this Act.

7.

Temporary authority to purchase student loans

(a)

Spending Authority

(1)

Authority granted

The first sentence of section 451(a) of the Higher Education Act of 1965 (20 U.S.C. 1087a(a)) is amended—

(A)

by inserting (1) after as may be necessary; and

(B)

by inserting before the period at the end of such sentence the following: ; and (2) for purchasing loans under section 459A.

(2)

Conforming amendment

Section 451(a) of such Act (20 U.S.C. 1087a(a)) is further amended by striking Such loans shall and inserting Loans made under this part shall.

(b)

Temporary Authority

Part D of title IV of the Higher Education Act of 1965 (20 U.S.C. 1087a et seq.) is amended by inserting after section 459 the following new section:

459A.

Temporary authority to purchase student loans

(a)

Authority To Purchase

(1)

Authority; determination required

Upon a determination by the Secretary that there is an inadequate availability of loan capital to meet the demand for loans under sections 428, 428B, or 428H, whether as a result of inadequate liquidity for such loans or for other reasons, the Secretary, in consultation with the Secretary of the Treasury, is authorized to purchase, or enter into forward commitments to purchase, from any eligible lender, as defined by section 435(d)(1), loans originated under sections 428, 428B, or 428H on or after October 1, 2003, on such terms as the Secretary, the Secretary of the Treasury, and the Director of the Office of Management and Budget jointly determine are in the best interest of the United States, except that any purchase under this section shall not result in any net cost to the Federal Government, as determined jointly by the Secretary, the Secretary of the Treasury, and the Director of the Office of Management and Budget.

(2)

Regulations required

The Secretary, the Secretary of the Treasury, and the Director of the Office of Management and Budget shall jointly promulgate emergency regulations and publish such emergency regulations promptly in the Federal Register concerning the purchases authorized by paragraph (1).

(3)

Methodology and factors; justification required

Such regulations shall outline the methodology and factors that the Secretary, the Secretary of the Treasury, and the Director of the Office of Management and Budget shall consider in evaluating the price at which to purchase loans under sections 428, 428B, or 428H, and shall include a justification of how the use of such methodology and consideration of such factors used to determine purchase price will ensure that loan purchases do not result in any net cost to the Federal Government.

(b)

Proceeds

The Secretary shall require, as a condition of any purchase under subsection (a), that the funds paid by the Secretary to any eligible lender under this section shall be used: (1) to ensure continued participation of such lender in the Federal student loan programs authorized under part B of this title; and (2) to originate new Federal loans to students, as authorized under part B of this title.

(c)

Maintaining servicing arrangements

The Secretary may, if agreed upon by an eligible lender selling loans under this section, contract with such lender for the servicing of the loans purchased, provided that—

(1)

the cost of such servicing arrangement does not exceed the cost the Federal Government would otherwise incur for the servicing of loans purchased, as determined under subsection (a); and

(2)

such servicing arrangement is in the best interest of the borrowers whose loans are purchased.

(d)

Expiration of Authority

The Secretary’s authority to purchase loans under this section shall expire on July 1, 2009.

.

(c)

Contracting Authority

Section 456(b) of the Higher Education Act of 1965 (20 U.S.C. 1087f(b)) is amended by inserting or purchased after loans made each place it appears in paragraphs (2) and (3).

8.

Sense of Congress

It is a sense of Congress that, at a time when our economy is fragile and higher education and retraining opportunities are more important than ever—

(1)

the Federal financial institutions, such as the Federal Financing Bank and Federal Reserve, and federally chartered private entities such as the Federal Home Loan Banks and others, should consider, in consultation with the Secretary of Treasury and the Secretary of Education, using available authorities in a timely manner, if needed, to assist in ensuring that students and families can access Federal student loans for academic year 2008–2009, and if needed in the subsequent academic year, in a manner that results in no increased costs to taxpayers; and

(2)

any action taken as a result of such consideration should in no way limit or delay the Secretary of Education’s authority to operate the lender-of-last-resort provisions of section 428(j) of the Higher Education Act of 1965 (as amended by this Act), nor the authority to purchase Federal Family Education Loan Program loans, as authorized by section 459A of such Act (as added by this Act).

9.

GAO study on impact of increased loan limits

(a)

Study required

The Comptroller General shall conduct a study to evaluate the impact of the increase in Federal loan limits provided for in section 2 of this Act and section 8005 of the Deficit Reduction Act of 2005 with respect to the impact on—

(1)

tuition, fees, and room and board at institutions of higher education; and

(2)

private loan borrowing by students and parents for attendance at institutions of higher education.

(b)

Study Components

The study required under subsection (a) shall be conducted for each major sector of institutions of higher education over a 5-year time period. The report shall specifically analyze the following:

(1)

Whether, on average, tuition, fees, and room and board increase, decrease, or remain unchanged in each such sector after the increases in Federal loan limits take effect.

(2)

Whether the amount of private educational loans taken out by students (and their parents) at institutions in each such sector to pay tuition, fees, and room and board increase, decrease, or remain unchanged.

(c)

Report

Not later than one year after the date of enactment of this Act, the Comptroller General shall provide an interim report to the Committee on Education and Labor of the House of Representatives and the Committee on Health, Education, Labor, and Pensions of the Senate including the initial results of the study conducted under this section. The Comptroller General shall follow up with such Committees after the third year and the fifth year after such date of enactment.

Passed the House of Representatives April 17, 2008.

Lorraine C. Miller,

Clerk.