Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act, 2006
DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, AND EDUCATION, AND RELATED AGENCIES APPROPRIATIONS ACT, 2006 -- (House of Representatives - June 24, 2005)
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Mr. VAN HOLLEN. Mr. Chairman, I offer an amendment.
The CHAIRMAN. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment offered by Mr. Van Hollen:
At the end of the bill (before the short title), insert the following:
SEC. __. None of the funds made available in this Act may be used to administer or pay any special allowance under section 438(b)(2)(B) of the Higher Education Act of 1965 (20 U.S.C. 1087-1(b)(2)(B)) with respect to--
(1) any loan made or purchased after the date of enactment of this Act;
(2) any loan that had not qualified before such date of enactment for receipt of a special allowance payment determined under section 438(b)(2)(B) of the Higher Education Act of 1965; or
(3) any loan made or purchased before such date of enactment with funds described in the first or second sentence of section 438(b)(2)(B)(i) of such Act if--
(A) the obligation described in the first such sentence has, after such date of enactment, matured, or been retired or defeased; or
(B) the maturity date or the date of retirement of the obligation described in the first such sentence has, after such date of enactment, been extended.
The CHAIRMAN. Pursuant to the order of the House of June 23, 2005, the gentleman from Maryland (Mr. Van Hollen) and a Member opposed each will control 5 minutes.
The Chair recognizes the gentleman from Maryland (Mr. Van Hollen).
Mr. VAN HOLLEN. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, this amendment is designed to stop what is an ongoing scam in the college student loan program whereby a small handful of lenders are receiving a guaranteed 9.5 government-paid return on certain student loans. As a result of this 9.5 percent loan scheme, the Government Accountability Office has found that certain lenders are pocketing billions of dollars in taxpayer money that would otherwise go to students.
The gentleman from Michigan (Mr. Kildee), the gentleman from California (Mr. George Miller), and I have offered legislation to address this issue, but we should address this issue right here on the floor and right now.
We have heard a lot of people coming to the floor saying that we need more funds for higher education; we need more money for Pell grants; we need to provide more opportunities for students to make sure college is affordable. That is what this is about.
If we adopt this amendment, we will close the loophole and we will free up billions of dollars that can go to the purposes we all want them to go to, which is to provide greater opportunities for students to go to college.
The Department of Education has estimated that closing the loophole will save over $7 billion. Other estimates take the number even higher. So I urge this House to adopt this amendment and provide greater opportunities for our students to go to college.
Mr. Chairman, I reserve the balance of my time.
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Mr. VAN HOLLEN. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, I thank my colleague, the chairman of the Committee Education and the Workforce, for those remarks; but the action the Congress took last year was too limited. First of all, it only lasted a year so we could come back this year to fix the problem; but the other part of the problem was it left a big part of the loophole still in place, what is called ``recycling,'' so that the lenders can continue to receive this windfall of 9.5 percent guarantee on those loans.
This amendment is prospective only. It does not look back; it only looks to the future. Nobody who has been promised certain returns on their loans will lose the promises they have been made. But what it prevents from happening is future recycling, future abuse in this program. So I urge adoption of the amendment.
Mr. Chairman, I reserve the balance of my time.
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Mr. VAN HOLLEN. Mr. Chairman, I yield myself the balance of my time.
Mr. Chairman, I have a very different view of this amendment and what it will do, obviously, than the chairman of the Committee on Education and the Workforce.
In fact, what this will do is free up additional funds that can be used to make sure more students have the opportunity to go to college, because what is happening right now through this recycling scheme is that the lenders, the makers of the loan, are getting a 9.5 percent essentially guaranteed payment when we could in fact be using those monies instead to provide lower-cost loans to more students and to provide Pell grants.
This will give the Subcommittee on Education of the Committee on Education and the Workforce the opportunity to provide more funds to do what they have been saying all afternoon that they want to do.
The fact of the matter is this applies prospectively. This is not going to have a negative impact on these non-profit lenders. If you already have one of those loans out there, if you are already getting the sweetheart deal of 9.5 percent, you are still going to get that return. But what this would prohibit you from doing is that when you get that income from the students and the government, all those additional revenues, you cannot go out and do it again. You cannot keep this perpetual-motion machine going.
According to some estimates, if we do not plug this hole, we will cost the taxpayers $13 billion, if we let it go on indefinitely. Monies that could be spent, again, could make sure that more students have the opportunity to go to college.
I know that we will be dealing with it in the Committee on Education and the Workforce; but in the budget that passed this House, we did not deal with this issue. The budget does not envision closing the recycling loophole. The President 2 years ago submitted a budget that did envision closing the recycling loophole, but a bunch of lenders with interest in this, a lot of lenders who are making a ton of money obviously built up the pressure and it was heard. As a result, the budget does not close the loophole fully. Let us close the loophole fully.
Let me say in closing, Mr. Chairman, the issue of the 9.5 percent loans is costing the American taxpayer and the American students billions of dollars a year. The General Accountability Office has looked into this issue. They have done an investigation. They have determined the Department of Education had the authority to shut this down. The Department of Education has not used that authority. Congress must use its authority, and it should do it now.
I cannot think of any better place to deal with this issue than in the bill that provides funding for higher education. Because if we adopt this amendment, if the Congress adopts this amendment, it will immediately free up additional resources that we can spend as a Nation on providing students with more loans and providing more grants. So as a result of this amendment, more students will have the opportunity to go to college. I urge its adoption.
Mr. Chairman, I yield back the balance of my time.
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