Wednesday, April 23, 2008

McCotter Votes to Ensure Continued Access to Student Loans for American Families

WASHINGTON D.C. – Congressman Thaddeus McCotter (R-MI), House Republican Policy Chairman, applauded the passage of bi-partisan bill to ensure the economic downturn does not deter students from accessing financial aid needed to pay for college.

McCotter voted for the legislation, The Ensuring Continued Access to Student Loans Act of 2008 (H.R. 5715), which increases the limits on federal school loans and grants. The bill provides new safeguards to ensure families have uninterrupted access to federal college loans in the event that stress on the economy leads to reduced availability to student loans and lending activity. The bill carries no additional cost for taxpayers.

“Especially here in Michigan, families have been hurt by the economy. With millions of American families budgeting for college costs, we must ensure students can still receive a higher education,” said McCotter. “They are both our future and our hope.”

In recent months, the crisis in the nation's credit markets has made it difficult for some lenders that participate in the federally guaranteed student loan program to secure the capital needed to finance their student lending activity.

H.R. 5715 would:

*Reduce borrowers' reliance on costlier private college loans by increasing the annual loan limits on federal college loans by $2,000 for all students, and by increasing the aggregate (the total loan limit over the course of a student's education) 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 – giving families more flexibility in hard economic times;

*Help struggling homeowners 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. 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;

*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 Education Department would be authorized to purchase loans only if doing so would not result in a net cost for the federal government; and

*Include a Sense of Congress that calls on federal financial institutions, including the Federal Financing Bank, to consider using their current authorities to inject liquidity into the student loan marketplace at no cost to the taxpayer to ensure students and parents continue to have access to low-cost federal loans.

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