WASHINGTON, D.C. — U.S. Rep. John Barrow (D-Savannah) joined a bipartisan majority in the U.S. House of Representatives to approve legislation to ensure that upheaval in the financial markets doesn’t keep students and families from getting the federal student loans they need to pay for college.
The Ensuring Continued Access to Federal Student Loans Act of 2008 (H.R. 5715), which carries no new cost for taxpayers, passed the House by a vote of 383-27.
“We can’t let the crisis in the financial markets interfere with the ability of our kids to get an education,” Barrow said.
“Between outrageous gas prices, the rising cost of groceries, and the mortgage crisis, Georgia families are hurting. Most can’t afford to pay for college without the help of federal student loans, and even then it’s a stretch for most families. It’s essential that we make sure they can continue to count on this help.”
The Ensuring Continued Access to Student Loans Act of 2008 (H.R. 5715) would provide new protections to ensure that families continue to have timely, uninterrupted access to federal college loans in the event that the stress in the credit markets leads a significant number of lenders to substantially reduce their activity in the federally guaranteed student loan program.
H.R. 5715 would:
• Increase the annual loan limits on federal college loans by $2,000 for undergraduate students, and increase 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 (Parent Loan for Undergraduate Students) loans by giving them the option to defer repayment for 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 PLUS loans. Under current law, parents with an adverse credit history are ineligible to receive a PLUS loan, except under extenuating circumstances. The legislation would temporarily classify as an extenuating circumstance delinquencies on home mortgages of up to 180 days, thereby 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 required 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 student 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.