PLUS Loan Borrower Protection Act of 2008

Mr. President, I rise today with Senator Kennedy, Senator Brown, Senator Murray, Senator Sanders, and Senator Clinton to introduce the PLUS Loan Borrower Protection Act of 2008. This bill is designed to ensure that students and parents can get access to PLUS Loans even if they have been caught up in the subprime mortgage crisis.

In recent months there have been indications that students may face a challenge getting access to some Federal Stafford loans and private education loans because of the growing credit crisis in the financial markets. While I am unaware of an instance to date when a student has been unable to secure a loan, the withdrawal of certain lenders, the ongoing turmoil in U.S. credit markets and the absence of liquidity in the student loan market have fueled concerns that a potential student loan credit crunch may be looming. One which could leave millions of students in a last-minute dash to secure the financial assistance they need to attend college this academic year.

Last week I held a hearing in the Senate Banking Committee to examine this issue and consider how to address this situation. Based on what I heard in that hearing I have contacted Treasury Secretary Paulson and Federal Reserve Board Chairman Bernanke to urge each of them to utilize all existing tools, including options allowing federally-backed and AAA-rated private student loans to be used as collateral at the Fed's temporary secured lending facility, TSLF, and using the Federal Financing Bank under Treasury to help prime the pump of liquidity, in order to help avert a funding crisis in the student loan market. I have also cosponsored the Strengthening Student Aid for All Act to bring stability and certainty to several Federal financial aid programs. Sen. Kennedy took the lead in introducing that legislation and I am proud to support him.

But during the hearing another element of this issue came to my attention--Federal PLUS loans. PLUS loans are supposed to be available to individuals who do not meet the financial needs tests of other Federal financial aid programs. But current law and regulation prevent individuals who have been more than 90 days delinquent on a mortgage payment or who have gone through a foreclosure within the previous 5 years from getting a PLUS loan. Normally that is a good standard to have--it helps ensure that individuals do not get themselves so much into debt that they cannot get out. But with our recent history in the subprime mortgage market and the ensuing credit crisis, this requirement can have a much broader and more damaging result--denying college education to the next generation. Individuals who may need PLUS loans more than ever this fall because other sources of aid and lending may be unavailable, might be denied this aid because of the mismanagement of our housing market. This is unacceptable.

Ensuring that students have available and affordable access to a college education should be among our highest priorities. Our world is growing more complex by the day. Never has higher education been more crucial to the success of our people and our country. Today, 60 percent of the new jobs being created by our economy require at least some post-secondary education. Compare that to a half-century ago, when only 15 per cent of new jobs required some amount of college. If our children are to achieve their highest aspirations, and if our Nation's economic backbone is to continue to remain strong, then we must ensure that the doors of higher education remain open for all who have the desire and ability to walk through them.

That is why we are introducing the PLUS Loan Borrower Protection Act of 2008 today. It would eliminate delinquency and foreclosures during this tumultuous time from being a disqualifying factor in awarding PLUS loans. Lenders would still be able to make judgments about the credit of a PLUS loan borrower on the basis of other parts of their credit history. But if the only mark against a borrower is being caught up in the current mortgage crisis, the lender could not disqualify them. Given the current upheaval in our economy, this is a simple and necessary step to make sure our children can still get a needed education.

As the Congress moves to address access to student loans and the current credit crisis, I will work to include this bill in our response. I want to thank Senators Kennedy, Brown, Murray, Sanders, and Clinton for joining with me on this bill and I urge my other colleagues to cosponsor this important legislation and join me in this effort.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, I rise today with Senator Kennedy, Senator Brown, Senator Murray, Senator Sanders, and Senator Clinton to introduce the PLUS Loan Borrower Protection Act of 2008. This bill is designed to ensure that students and parents can get access to PLUS Loans even if they have been caught up in the subprime mortgage crisis.

In recent months there have been indications that students may face a challenge getting access to some Federal Stafford loans and private education loans because of the growing credit crisis in the financial markets. While I am unaware of an instance to date when a student has been unable to secure a loan, the withdrawal of certain lenders, the ongoing turmoil in U.S. credit markets and the absence of liquidity in the student loan market have fueled concerns that a potential student loan credit crunch may be looming. One which could leave millions of students in a last-minute dash to secure the financial assistance they need to attend college this academic year.

Last week I held a hearing in the Senate Banking Committee to examine this issue and consider how to address this situation. Based on what I heard in that hearing I have contacted Treasury Secretary Paulson and Federal Reserve Board Chairman Bernanke to urge each of them to utilize all existing tools, including options allowing federally-backed and AAA-rated private student loans to be used as collateral at the Fed's temporary secured lending facility, TSLF, and using the Federal Financing Bank under Treasury to help prime the pump of liquidity, in order to help avert a funding crisis in the student loan market. I have also cosponsored the Strengthening Student Aid for All Act to bring stability and certainty to several Federal financial aid programs. Sen. Kennedy took the lead in introducing that legislation and I am proud to support him.

But during the hearing another element of this issue came to my attention--Federal PLUS loans. PLUS loans are supposed to be available to individuals who do not meet the financial needs tests of other Federal financial aid programs. But current law and regulation prevent individuals who have been more than 90 days delinquent on a mortgage payment or who have gone through a foreclosure within the previous 5 years from getting a PLUS loan. Normally that is a good standard to have--it helps ensure that individuals do not get themselves so much into debt that they cannot get out. But with our recent history in the subprime mortgage market and the ensuing credit crisis, this requirement can have a much broader and more damaging result--denying college education to the next generation. Individuals who may need PLUS loans more than ever this fall because other sources of aid and lending may be unavailable, might be denied this aid because of the mismanagement of our housing market. This is unacceptable.

Ensuring that students have available and affordable access to a college education should be among our highest priorities. Our world is growing more complex by the day. Never has higher education been more crucial to the success of our people and our country. Today, 60 percent of the new jobs being created by our economy require at least some post-secondary education. Compare that to a half-century ago, when only 15 per cent of new jobs required some amount of college. If our children are to achieve their highest aspirations, and if our Nation's economic backbone is to continue to remain strong, then we must ensure that the doors of higher education remain open for all who have the desire and ability to walk through them.

That is why we are introducing the PLUS Loan Borrower Protection Act of 2008 today. It would eliminate delinquency and foreclosures during this tumultuous time from being a disqualifying factor in awarding PLUS loans. Lenders would still be able to make judgments about the credit of a PLUS loan borrower on the basis of other parts of their credit history. But if the only mark against a borrower is being caught up in the current mortgage crisis, the lender could not disqualify them. Given the current upheaval in our economy, this is a simple and necessary step to make sure our children can still get a needed education.

As the Congress moves to address access to student loans and the current credit crisis, I will work to include this bill in our response. I want to thank Senators Kennedy, Brown, Murray, Sanders, and Clinton for joining with me on this bill and I urge my other colleagues to cosponsor this important legislation and join me in this effort.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.