Rep. Courtney Welcomes House Passage of Critical Student Loan Safety Net

Press Release

Congressman Joe Courtney welcomed House passage of the "Ensuring Continued Access to Student Loans Act of 2008," which would create a safety net for the Federal student loan program during this period of turmoil in the lending industry. Congressman Courtney is an original cosponsor of the bipartisan legislation and voted for the measure which passed the House by 383-27.

This legislation is a comprehensive response to the impact of the liquidity crisis on the student loan market. This bill addresses the grave concerns Congressman Courtney and others had as to whether the Department of Education was ready to meet the lending industry challenge. Mr. Courtney worked with House Education and Labor Chairman George Miller to help steer the bill quickly through the House Education and Labor Committee for consideration by the full House.

"It is critical that the Congress gets out ahead of the student lending issue before this becomes a full blown crisis due to inaction by the Administration," said Courtney. "This important legislation provides a safety net for student borrowers and their families and bolsters student loan affordability. I applaud Chairman Miller, House Leadership, and bipartisan colleagues to join together and take swift action to restore confidence in the student loan markets."

The announcement this week that Citigroup will stop lending money to students at certain schools because of turmoil in the economy and the bond market and the Massachusetts Educational Financing Authority will suspend federal student loans on July 1 underscore the seriousness and timeliness of House passage of this legislation.

The "Ensuring Continued Access to Student Loans Act of 2008" will provide necessary relief for students and greater affordability by:

- Reducing borrowers' reliance on costlier private college loans by increasing the loan limits on federal college loans by $2,000 per year for all students;
- Giving parent borrowers more time to begin paying off their federal PLUS college loans. Currently, parent borrowers must begin repayment 60 days after disbursement of the loan; under this legislation, parents would be able to defer repayment until six months after their children graduate from college. This would likely encourage more families to borrow PLUS loans rather than private college loans;
- Clarifying 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. 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
- Giving the U.S. Education Secretary the temporary authority to purchase loans from lenders in the federal guaranteed loan program. The Education Department would then service the loans through its Direct Loan program. This proposal would ensure that lenders continue to have access to capital to originate new loans. The Education Department would be authorized to purchase only those loans that do not carry a net cost for the federal government

In March, Congressman Courtney and higher education officials and advocates held a press conference at the University of Connecticut to urge students and their families to begin planning now for their financial assistance needs rather than waiting until the summer to begin considering aid programs.

"We have to alert students and families in eastern Connecticut to take the proper precautions and engage early the student lending process this year in this unsteady economy," stated Courtney. "Congressional action today can help these families as they engage in the student loan market for this fall."

Congressman Courtney is the first Member of Congress from the Second Congressional District of Connecticut to serve as a member of the House Education and Labor Committee since the World War II era. Since joining the Committee in 2007, the Congressman has been a very early advocate of college affordability and access.

During committee debate on the College Cost Reduction and Access Act last year, Congressman Courtney offered an amendment to increase Pell Grant spending by $900 million above an already increased level of funding.

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