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Union Calendar No. 417

104TH CONGRESS

2D SESSION H. R. 3863

[Report No. 104–775]

To amend the Higher Education Act of 1965 to permit lenders under the

unsubsidized Federal Family Education Loan program to pay origination

fees on behalf of borrowers.

IN THE HOUSE OF REPRESENTATIVES

JULY 22, 1996

Mr. GOODLING (for himself, Mr. GREENWOOD, Mr. MCKEON, Mr. FATTAH,

Mr. FAWELL, Mr. CLINGER, and Mr. GEKAS) introduced the following

bill; which was referred to the Committee on Economic and Educational

Opportunities

SEPTEMBER 5, 1996

Additional sponsors: Mr. KNOLLENBERG, Mr. FOX of Pennsylvania, Mr. ENGLISH of Pennsylvania, Mr. MCHUGH, Mr. WELDON of Pennsylvania, Mr.

BORSKI, Mr. ZIMMER, Mr. ROHRABACHER, Mr. EWING, Mr. WATTS of

Oklahoma, Ms. GREENE of Utah, Mr. PALLONE, Mr. GREEN of Texas,

Mr. HOLDEN, Mr. FLAKE, Mr. EHLERS, Mr. KANJORSKI, Mr. EVANS,

Mr. KENNEDY of Massachusetts, Mr. GUNDERSON, Mr. MASCARA, Mr.

ACKERMAN, Mr. DELLUMS, and Mr. UPTON

SEPTEMBER 5, 1996

Reported with amendments, committed to the Committee of the Whole House

on the State of the Union, and ordered to be printed

[Omit the part struck through and insert the part printed in italic]

A BILL

To amend the Higher Education Act of 1965 to permit
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lenders under the unsubsidized Federal Family Education Loan program to pay origination fees on behalf

of borrowers.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Student Debt Reduc5 tion Act of 1996’’.

6 SEC. 2. UNSUBSIDIZED STUDENT LOANS.

7 (a) AMENDMENT.—Paragraph (1) of section 428H(f)

8 of the Higher Education Act of 1965 (20 U.S.C. 1078–

9 8(f)(1)) is amended to read as follows:

10 ‘‘(1) AMOUNT OF ORIGINATION FEE.—Except

11 as provided in paragraph (5), an origination fee

12 shall be paid to the Secretary with respect to each

13 loan under this section in the amount of 3.0 percent

14 of the principal amount of the loan. Each lender

15 under this section is authorized to charge the bor16 rower for such origination fee, provided that the

17 lender assesses the same fee to all student borrowers.

18 Any such fee charged to the borrower shall be de19 ducted proportionately from each installment pay20 ment of the proceeds of the loan prior to payment

21 to the borrower.’’.

22 (b) CONFORMING AMENDMENTS.—Section 428H

23 Section 428H(f) of such Act is further amended—
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1 (1) in paragraph (3), by striking ‘‘the origina2 tion fee’’ and inserting ‘‘any origination fee that is

3 charged to the borrower’’; and

4 (2) in paragraph (4), by striking ‘‘origination

5 fees authorized to be collected from borrowers’’ and

6 inserting ‘‘origination fees required under paragraph

7 (1)’’.; and

8 (3) by adding at the end the following new para9 graph:

10 ‘‘(6) EXCEPTION.—Notwithstanding paragraph

11 (1), a lender may assess a lesser origination fee for

12 a borrower demonstrating greater financial need as

13 determined by such borrower’s adjusted gross family

14 income.’’.

15 (c) REPORT ON COMPETITIVE ALLOCATION.—Within

16 60 days after the date of enactment of this Act, the Sec17 retary of Education shall submit to each House of the Con18 gress a legislative proposal that would permit the Secretary

19 to allocate the right to make subsidized and unsubsidized

20 student loans on the basis of competitive bidding. Such pro21 posal shall include provision to ensure that any payments

22 received from such competitive bidding are equally allocated

23 to deficit reduction and to pro rata reduction of origination

24 fees in both guaranteed and direct student loans.
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1 SEC. 3. STUDY OF LOAN FEES.

2 (a) STUDY REQUIRED.—The Secretary of Education

3 shall conduct a statistical analysis of the subsidized and

4 unsubsidized student loan programs under part B of title

5 IV of the Higher Education Act of 1965 to gather data on

6 lenders’ use of loan fees and to determine if there are any

7 anomalies that would indicate any institutional, pro8 grammatic or socioeconomic discrimination in the assessing

9 or waiving such fees.

10 (b) REPORT.—The Secretary of Education shall sub11 mit to each House of the Congress a report on the study

12 required by subsection (a) within 2 years after the date of

13 enactment of this Act.

14 (c) STATISTICAL CHARACTERISTICS TO BE STUD15 IED.—In conducting the study required by subsection (a),

16 the Secretary of Education shall compare recipients of loans

17 on the basis of income, residence location, type and location

18 of higher education, program of instruction and type of

19 lender.
Union Calendar No. 417

104TH CONGRESS

2D SESSION H. R. 3863

[Report No. 104–775]

A BILL

To amend the Higher Education Act of 1965 to

tion fees on behalf of borrowers.Family Education Loan program to pay originapermit lenders under the unsubsidized Federal

SEPTEMBER 5, 1996

Reported with amendments, committed to the Committee

dered to be printedof the Whole House on the State of the Union, and or-