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FOR IMMEDIATE RELEASE: May 1, 2008
CONTACT: Matt Mackowiak
Sen. Hutchison Applauds Legislation Expanding Access to Student Loans
Bill Proceeds to the President after Senate Passage Wednesday and House Passage Today
WASHINGTON -- U.S. Senator Kay Bailey Hutchison (R-TX), Texas’ senior senator, today applauded both houses of Congress passing H.R. 5715, the Ensuring Continued Access to Student Loans Act of 2008. The measure would provide additional protections to ensure that college students and families continue to have timely, uninterrupted access to federal college loans, should the stress in the credit markets cause lenders in federally guaranteed student loan programs to substantially limit their lending activity.
“I am pleased Congress has acted swiftly to provide the assurance to college students and their families that they will have access to affordable federal student loans, despite worrisome trends in credit markets,” said Sen. Hutchison. “This legislation provides important protections that could help prevent the credit uncertainty from spreading to student loans.”
In recent months, the crisis in the nation’s credit markets has made it challenging for some lenders that participate in the federally guaranteed student loan program to secure the capital needed to finance their student lending activity. As a result, some lenders have announced plans to decrease their lending activity; while others have announced plans to increase their share of loans.
The Ensuring Continued Access to Student Loans Act of 2008 would:
* Reduce borrowers’ reliance on costlier private college loans by increasing the annual loan limits on federal college loans for dependent and independent undergraduate students by $2,000, and by increasing the aggregate 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 or cease to carry at least 50% of a full time academic workload – giving families more flexibility in hard economic times;
* Help struggling families 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.
* 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.
* 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 Senate included amendments to the bill that would require federal student loans that are granted on emergency basis would be subject to the same terms and protections as loans made under normal circumstances. The legislation now proceeds to the President for his signature or veto.
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