One-stop Student Financial Aid Information Act of 2007

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 890) to establish requirements for lenders and institutions of higher education in order to protect students and other borrowers receiving educational loans, as amended.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days to insert materials relevant to H.R. 890 into the Record.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise in support of this legislation, H.R. 890, the Student Loan Sunshine Act of 2007. I offer this legislation along with Mr. McKeon, the senior Republican on the Education and Labor Committee; and Mr. Hinojosa, the subcommittee Chair of the Higher Education Subcommittee on the Education and Labor Committee.

This legislation would protect students and families from the corrupt practices and abuses that for too long have been allowed to run rampant within the student loan industry.

Ensuring that our Nation's student loan programs are working as effectively as possible to help students and parents pay for the cost of a college education, it is paramount to the goals of this Nation recognizing the importance of students' achieving a college education so they can fully participate in American society and the American economy. And working to make that more accessible and affordable has been the long-term goal of both parties of this government.

But now what we see is that this program has been badly corrupted. This program has started to be hollowed out by the activities of lenders, of universities, of individuals within the government, individuals within the university system, individuals within the lending community. For 6 years this administration has been put on notice of these activities taking place in the student lending program with ever-mounting evidence and public statements and concerns echoed by members within the administration from the previous administration calling to the problems that were occurring within the student loan programs. It is becoming increasingly clear that the student loan program has been hijacked by third parties who saw that they could run this program to their financial benefit. Unfortunately, that meant that it was being run to the detriment of the students and the families who are borrowing the money who are struggling to pay this money back so that they could achieve a college education.

We introduced this legislation first in February when it was disclosed by New York Attorney General Andrew Cuomo that he was expanding an investigation into the relationships between lenders and colleges and universities across the country.

Throughout the previous years, stories have surfaced about inducements and kickbacks and conflicts of interests, bribes and payoffs ranging from sending college employees on exotic vacations to staffing school financial aid offices during the busiest time of the student aid calendar. These inducements are offered by lenders to secure a spot on the preferred lender list, a list that supposedly presents to the students and to their families that this is a list of trust, that these are the best loans available for a number of reasons to those students. But we now learn that securing a position on a preferred lender list was really, in many instances with many universities and with many lenders, an act of corruption, not an act of transparency, not an act of honesty, not an act in the best interest of the students and/or their parents, and not in the best interest of achieving the lowest possible cost for those students' education.

But entry into the preferred lender meant more than just having this coveted spot. It meant a near guarantee of business. It meant an opportunity for lenders to prey on families and offer them private loans. It also meant that students weren't given the best information, the most accurate information. It also meant increased cost to the students and to their families.

Since we first introduced this bill, ongoing investigations at the Federal and State levels and by news organizations have shed new light on the scope of the corruption and the conflicts of interest surrounding these lists that are undermining the Federal student loan aid program that millions of borrowers have come to depend upon. We have learned more about the astonishing degree to which lenders buy their way into colleges and universities through excessive inducements, which is the polite word, or what might be termed ``bribery,'' which might be a better word, in order to boost their marginal profits.

All of this, all of this was known to the Department of Education. Suggested changes were left behind by the Clinton administration to this program. Department employees raised these concerns and others with the Department of Education, and no action was, in fact, taken. And what we see, of course, is that less protection was provided to students and to their families.

We have learned that these inducements include college officials being paid to serve on lender advisory boards and receiving stock in the companies. We have learned that these conflicts of interest do not end with college financial aid officers. It has been revealed that at least one public official in the Office of Federal Student Aid, the arm of the Department of Education that runs the student aid program, held hundreds of thousands of dollars of stock in a major student loan company.

But this is just the tip of the iceberg. Lenders and schools must be held accountable for any practice that compromises the trust that students and parents deserve to have in our Federal student aid program. Today, by passing the Student Aid Sunshine Act, we are taking clear and important actions to put an end to the corrupt practices and conflicts of interest that for too long have been allowed to dominate this industry.

We call on lenders, institutions and the Department of Education to also take appropriate action to end these practices, and we insist that they recognize their fiduciary responsibility to the students and their parents who are the borrowers of this money, the borrowing of money that they struggle to pay back for many years afterwards.

I am proud to be joined by my colleagues on the Education and Labor Committee, Buck McKeon, the senior Republican, and, again, Ruben Hinojosa of the Subcommittee on Higher Education to bring to the floor a stronger, more comprehensive, bipartisan Student Loan Sunshine Act. This bill will prevent these egregious practices from occurring in the future by reinstating trust in our schools through strict codes of conduct, guaranteeing loan options and ensuring the best loan possible, ensuring equal and timely processing of loans, giving students full and fair information when taking out and repaying loans, protecting students from aggressive marketing practices and inserting the fiduciary responsibility for all parties to these agreements.

Further, this bill bans all gifts, participation on advisory boards and risk-sharing agreements between lenders and schools and ensures greater transparency and accountability when schools recommend lenders for the students.

I urge all of my colleagues to join us in voting for this legislation. Today, I think we can take this critical step toward returning these programs to the very people they were intended to serve, students and parents who are borrowing this money. It's time to protect these students and parents and end the exploitation and the abuses of the student loan program.

Again, I want to thank my colleagues on the committee for all their assistance in drafting this legislation.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself 15 seconds.

Mr. Speaker, I failed to acknowledge and I want to acknowledge Mr. Keller's help in the drafting of this legislation. He is the senior Democrat on the Higher Education Subcommittee.

I would like to yield 3\1/2\ minutes to the Chair of that subcommittee, Mr. Hinojosa.

I yield 2 minutes to the gentlewoman from California (Ms. Woolsey).

Mr. Speaker, I yield 2 minutes to the gentlewoman from Florida (Ms. Wasserman Schultz).

Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from Illinois (Mr. Emanuel).

Mr. Speaker, I thank the gentleman.

Mr. Speaker, I yield 1 minute to the gentleman from Texas (Mr. Hinojosa).

Mr. Speaker, I thank the gentleman from Texas for his remarks and for his leadership on this. I thank Mr. McKeon and Mr. Keller for all of their cooperation, for their suggestions and for the introduction of the bill soon after this came to light by Mr. McKeon. I think it was very helpful in our discussions with Attorney General Andrew Cuomo. I certainly want to thank him for his diligence and the speed with which he responded to this information.

Tragically, much of this information has been available for a considerable period of time. Tragically, what we now are making against the law, the conduct we are now changing almost became the preferred way of doing business among many of the colleges and universities and the lenders which they utilized on behalf of their students.

It is just inconceivable that when people understand, and it is brought to our attention every day, the decisions that students and their families have to make about whether to pursue a college degree, the costs that are incurred, the sacrifices that are made by working families, by all families, by the students, many of whom then work part time and full time to augment the cost of that college, when that sacrifice and those determinations and decisions are made by those families, to have that process corrupted by some of the largest corporations in America, some of the wealthiest corporations in America, that they would see somehow a way to skim off, to skim off the profits and the costs at the expense of these students and of the taxpayers that put up the money.

The reason we guarantee these loans is to try to drive this money to the students and their families at the lowest possible cost so that they can afford to go to college; they can afford to take a job and pay back the cost of their college. That is the public purpose. Now that public purpose has absolutely been prostituted by the Department of Education, by many of the lending institutions and by many of the colleges and much of the personnel that works for them.

This legislation is a first step, a bipartisan step to stop those practices in their tracks, to get this program right side up for the benefit of the families and the students who are borrowing the money. To serve notice on the institutions, the lenders, the institutions of higher education and the people who work in these programs that this will no longer be tolerated.

Once again, this program has to come to the point where it is again serving the families and the students who are making this sacrifice to achieve a college education at the lowest possible cost. That is the public interest, that is the public purpose, and we will not have that corrupted. We will not have that corrupted, either by the public agencies or the private agencies that are engaged in this program.

The next step is to bar those agencies if they continue in this practice. That would be a horrible thing to do for those institutions, but we will not allow this to continue. And as we consider the Higher Education Act, we are going to continue to pursue ways in which we can reform this program and make it work for those for whom it was designed, the families and the students.

I want to thank the staff on both sides of the committee that were so helpful in understanding the programs and the changes that needed to be made, that went through the evidence and responded in this legislation, so that the House of Representatives could go on record that we will not allow this to happen on our watch.

Mr. Speaker, I urge the House to pass H.R. 890, as amended, and I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise in support of this legislation and thank Chairman Miller and Chairman Hinojosa, Ranking Member Keller, and their staffs and my staff for striking a bipartisan accord to advance this bill.

I have often said that in order to begin reaffirming trust in our student aid system all stakeholders must step up. That means lenders, colleges, the Education Department, States and Congress all have a role to play.

Within the past few weeks, Secretary of Education Spellings established an internal task force to review her Department's oversight of Federal student loan programs; and, today, the U.S. House is stepping up as well. It is an important step, to be sure. We are stepping up today for a single, fundamental reason, to ensure our Nation's financial aid system continues to serve the need of the students who depend on it for the opportunity to get an education.

This isn't about us versus the lenders or us versus the financial aid officers, and this isn't about direct loans versus the market-based FFEL program. And, for the record, I continue to strongly support FFEL and a healthy competition between the two Federal programs. This is about protecting the interests of millions of young men and women who expect our student aid system to be there for them when they need it.

Several weeks ago, my Education and Labor Committee colleague, Mr. Keller, and I introduced comprehensive legislation to begin the process of reaffirming our trust in the financial aid system. I am proud that our bill served as an impetus for bringing the measure before us to the House floor.

Our legislation built on many of the financial aid reform recommendations Chairman Miller made earlier this year, and I am pleased that what we are poised to advance today reflects a broad agreement to set these important reforms into motion.

Like my bill and Chairman Miller's bill, the bipartisan agreement we will vote on today does not explicitly outlaw the practice of preferred lender lists. Rather, it reforms this practice to ensure that it continues to serve the interests of our students. Like my bill and Chairman Miller's bill, the bipartisan agreement we will vote on today aims to protect against conflicts of interest between lenders and financial aid officers. And like my bill and Chairman Miller's bill, the bipartisan agreement we will vote on today allows lenders to seek advice from institutions in order to improve products and services for students.

However, the measure Mr. Keller and I introduced went even further than past recommendations, and I am pleased the agreement we will vote on today incorporates our important modifications. For example, just as in the bill I authored with Mr. Keller, the measure before us asks colleges to develop their own unique codes of conduct that must include restrictions on anything else that may give the appearance of a conflict of interest between financial aid officers and lenders. And just as in the bill I authored with Mr. Keller, the measure before us bans revenue sharing between lenders of private loans and colleges or universities.

Mr. Speaker, the FFEL and other financial aid programs successfully serve millions of students and their families every year, and this bill makes our system even better. As we move forward from here, we must not lose sight of the fact that the Federal financial aid system must work for students and colleges alike. We must be careful not to overreach, as Congress does all too often, but we do need to reaffirm our trust in the system. I believe this bill does just that.

I urge my colleagues to join me in supporting it.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield now 4 minutes to the ranking member Republican on the Higher Education Subcommittee, the gentleman from Florida (Mr. Keller).

Mr. Speaker, I yield myself such time as I may consume to close the debate.

Mr. Speaker, what our job is here in Washington as legislators is to represent the people from our districts, the people from around the country. Specifically on the Committee on Education, we have the responsibility to protect and encourage those young people who are trying to receive an education, both K-12 level and those who want to continue their education throughout their lifetime at the higher education level.

We have passed many laws that try to make it easier for people to achieve the American Dream through education. Sometimes we have people that skirt those laws or take them up to the edge. When we find problems, it is our responsibility to address those problems.

We have about 6,000 schools across the country that participate in the Federal financial aid programs. They have financial aid officers that work with the students that come into the schools to help them get a Pell Grant or get other financial aid that is available, or they help them find a loan company that will help them get a loan that is needed to achieve their education.

We have about 3,500 lenders that participate in these loans. Again, some of the lenders have crossed the line or gotten too close to the line, as with some of the financial aid officers, but we definitely don't want to paint all lenders, all schools, all financial aid officers, with a broad brush, saying they are all corrupt. Most of them, the vast percentage of them, are doing a great job of trying to carry out their mission and helping students achieve their goals.

This piece of legislation will help make that law stronger, to verify that those students will get the most help in getting the loans and getting the financial aid they need to achieve the American Dream, and I am happy to be a part of this, to make it come to pass. I am hopeful that the other body will pick up this legislation and move forward with it. I encourage all of my colleagues to support this law.

Mr. Speaker, I thank, again, Chairman Miller for being expeditious on this and getting this bill to the floor quickly.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I ask unanimous consent that both sides be allocated an additional 1\1/2\ minutes in order to allow Mr. Castle, the ranking member, who has just arrived, to speak on the bill.

Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from Delaware (Mr. Castle).

(Mr. CASTLE asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I would like to thank the chairman and the ranking member for their leadership on this issue.

Mr. Speaker, not one of us would be here if it wasn't for the ability to afford a college education, and although we are talking about cleaning up a mess, it is quite clear we should also remember what is happening here. For a long time, there was no oversight or

any accountability in administration, and people from industry were actually in the responsibility, and their response was to govern and oversee industry they came from. So what did they do? They cut out the middleman. There is no need for a lobbyist, because the industry is the government in this case.

What is most ironic in this situation on the student loan situation is industry was getting taxpayer subsidies to run a business in which the very students that were also dependent on their parents were also paying the bill. They were paying on the front end and on the back end. And it was a total rip-off of the American taxpayers. And it is on a subject, college education, that is so essential, because we know, today, in the new economy, you earn what you learn.

What we are taking is people's ability to achieve the American Dream, which is so essential, a college education, that ticket to the American Dream. And rather than see what was an honorable profession, something important that could be done with good business practices, it has turned into a scandal that has affected both the schools and the administrators of those schools, public officials responsible for it, and the lenders in that industry. It was affecting everybody.

Now, I hope, and from conversations with the chairman, we can rest assured this is just the first step in changing the rules of the game so industry and those in the lending industry understand and those in the regulatory side of it that there is a new way we are going to do business. And there is a new code of conduct for both the public officials and those in the lending industry, because we must fundamentally remember, a college education is a ticket to the American Dream, in a society and economy where you earn what you learn.

I do want to recognize the Attorney General of New York for leading this effort, for Congress in a bipartisan fashion stepping up to the plate and taking the first step with this sunshine act.

But we are not done in cleaning up the mess as it relates to the college loan industry. This is only the first step to doing that, to cleaning up this mess, because it relates to other areas. We saw it today when the individual responsible for the oil and gas leasing and royalty payment industry because of congressional oversight is now stepping down because it is clear taxpayers were not given their fair shake.

We are doing the right job, and I commend both parties in the committee for holding these oversight hearings and producing this legislation and hope that we continue, as we did in the Six in '06, we voted, first of all, to cut the interest rates on student loans; we take this sunshine act, we come back with the higher education bill. We come with the FASA reform. We constantly make sure that we are reforming higher education and the access to higher education, so we serve the people who are doing right, working hard, paying taxes and raising their kids with the right sense of values to do right. This is an industry that needs a whole top-to-bottom cleaning and washing.

Thank you for your leadership, Mr. Chairman.

Mr. Speaker, for the past 6 years, the public has had to watch as scandal after scandal fell on deaf Republican ears.

How times have changed.

Today, Democrats are demanding accountability and ending business as usual.

We've put the spotlight on the rampant corruption in the Bush administration and the scandals that used to be shoved under the rug are now being exposed.

And the new Democratic Congress is getting results for the American people.

The latest corruption scandal involves lenders, schools and public officials and has undermined a vital student loan program that millions of students depend on.

On Monday the New York Times reported that over 4 years ago a researcher at the Education Department tried to warn his supervisors that student lending companies were improperly collecting hundreds of millions in overpayments.

Big companies were getting millions from the very taxpayers who were getting the bill on the other side. So what did the Bush administration do?

Nothing.

Top officials at the Department of Education's Student Aid Office made millions when they sold stock they held in lending companies.

What did the Department do when confronted with this obvious conflict of interest?

Nothing.

It wasn't until the media and this Congress began in oversight demanding accountability that these officials were put on leave. And yesterday, the head of Federal Student Aid abruptly announced her resignation.

Additionally, the Attorney General of New York uncovered a number of improper relationships between lenders and schools, where colleges received payments in exchange for steering loan volume to particular lenders.

It is time to clean up this mess and bring transparency to the system.

The legislation before us will do just that and help ensure this sort of scandal never occurs again.

Madam Speaker, students and families have been the victims of corporate greed, bribery and corruption in the Bush administration.

Now, it's time to put an end to these scandals and pass real reform.

I urge all of my colleagues to support this legislation.

I thank the gentleman for yielding. And I appreciate the Freudian slip by Congressman Chairman Miller. I still am Republican. I am reminded every day when my parking space is now out in Maryland that I'm a Member of the minority party here.

I rise today in support of the Student Loan Sunshine Act, H.R. 890, for three specific reasons.

First, this legislation fully includes legislation that I authored called the One-Stop Financial Aid Information Act, H.R. 1522, which creates an easy-to-use one-stop Web site for students and their families about financial aid information for college, including information about Pell Grants, student loans and scholarships offered by various Federal agencies. Far too many young people give up on their chance to go to college because they lack information about the various grants and scholarships available to them. Now they will have all this information right there at their fingertips as a result of an easy-to- access link right there on the home page of ed.gov.

I want to especially thank Congressman Henry Cuellar of Texas. It was Congressman Cuellar who actually conceived of this idea and shared it with me on a codel that he and I had to Iraq based on his positive experience with a similar Web site in Texas, and he is a coauthor of this provision.

The second reason I support this legislation is because it specifically includes a financial aid code of conduct that must be adopted by colleges; and that language is taken out of the bill authored by Congressman Buck McKeon called the Financial Aid Accountability and Transparency Act, H.R. 1994. In a nutshell, it provides that there shall be no conflicts of interests, gifts or revenue sharing between lenders and colleges or their employees.

The third reason I support this legislation is because it does not ban preferred lender lists under the market-based FFEL program. Now after the recent student loan scandal, some of which was highlighted by Attorney General Andrew Cuomo of New York, there was a temptation on a handful of people's part to overreact. Some wanted to abolish or place a moratorium on preferred lender lists. Some even suggested that we switch from the market-based FFEL program to direct lending. This appropriate legislation doesn't contain that overreaction, and I'm proud that it doesn't, and the reason is preferred lender lists play a very positive role when done right.

There are literally over a thousand student lenders. Some of those lenders have lower interest rates, low origination fees, more flexible terms for deferring repayments and better customer service. On the other hand, there are lenders that have higher rates and fees, bad customer service and can be characterized as fly-by-night operations. It's pretty hard to tell if you're an 18-year-old kid which lender is which, but if you're a financial aid administrator who has been in the business for two or three decades, you can give some guidance into that issue.

This bill specifically allows these preferred lenders to still have a preferred lender list, provided that each college gives a choice of at least three lenders, the college disclose why they were selected as a lender, and the college disclose what terms they remain a lender. That is a pretty fair and appropriate response to the scandals that we have had and a pretty good contrast to what we have with the Federal direct lending program where a college says you only have one lender, it's the Federal Government, and there is no competition for lower fees or rates.

In closing, Mr. Speaker, this legislation helps to rein in some of the bad apples in the student loan industry, while preserving the healthy and appropriate competition between the direct lending and FFEL program. For these reasons, I urge my colleagues to vote ``yes'' on this legislation.

Mr. Speaker, I rise in strong support of H.R. 890, the Student Loan Sunshine Act. This is the legislation that cannot wait. Given the daily revelations of scandals, conflicts of interest and cozy relationships that undermine public confidence in our student loan programs, it is imperative that we act now to restore integrity.

I would like to thank Chairman Miller and Ranking Member McKeon, as well as the ranking member of the subcommittee from Florida, Ric Keller, in approaching this legislation with urgency and bipartisanship. It is time to take a stand and put the interests of students and families first. This legislation is an important signal that we in Congress are committed to doing just that.

Mr. Speaker, this legislation will ban the most egregious practices that have been uncovered by Attorney General Cuomo in New York. Just read the New York Times this morning and you will see all that has been uncovered. It will require lenders and institutions alike to adhere to a strict code of conduct. It will ensure that preferred lender lists are based on the best deal for students. It will ensure that students and families have accurate, unbiased information about their loan options. It will ensure that borrowers are able to exhaust their Federal loan eligibility before being steered to pricier private loan packages.

The crisis of confidence in our student loan programs shines a light on a larger problem. We have a crisis in college affordability for our low- and middle-income families. College costs are rising rapidly, and Federal student aid has not kept pace. According to the Advisory Committee on Student Financial Assistance, paying for a 4-year public university costs our lowest-income families 87 percent of their income. We are expecting these families to come up with over $10,000 per year through work or loans to pay for college.

Quite simply, we have left low- and middle-income families to fend for

themselves when it comes to financing a college education. After 4 years of stagnation, the maximum Pell Grant stands at only $4,310. We have left families rudderless when it comes to navigating the explosive growth in the student loan programs. We have not looked after their interests.

After listening to many representatives of Federal and private college loan programs, I am convinced that we here in Congress must take this bipartisan action to restore integrity to this important program. The Student Loan Sunshine Act is a first step in restoring faith in our student aid programs and fulfilling the promise of the Higher Education Act.

Mr. Speaker, we have more work to do, but let's get this job done today. I strongly urge my colleagues to support H.R. 890, the Student Loan Sunshine Act.

Mr. Speaker, in closing, I want to say that this work that has been done by Chairman Miller and Ranking Member Buck McKeon has been something that I have really appreciated.

This is an $85 billion industry, and when you take the for-profit groups that are lending money, it exceeds $100 billion. I foresee that, with this legislation, we are going to see an increase as a result of that. We should be looking at $110 billion being lent, because it will be easier and much more acceptable to be able to borrow money at a lesser cost to the families.

Finally, in the area that I come from, were it not for these student loans, the Pell Grants and the Perkins Act loans that are available, many minority families' children, boys and girls, would not be able to go to college.

So we are pleased with the leadership of these two gentlemen, and I look forward to seeing its passage.