Date: 2004-10-06
Speaker: VAN HOLLEN (democrat)
Chamber: H

Mr. Speaker. I want to join with my colleagues. the gentleman from California and the gentleman from Michigan in thanking the gentleman from Ohio (Chairman BOEHNER) and the subcommittee chairmen and the others on that side for joining us in addressing a problem that we all agree has allowed lenders to pocket billions of dollars of taxpayer money at the expense of our students. The good news is that this bill begins. to address the problem. The bad news is it does not do the job fully or permanently. As the chairman knows. the gentleman from Michigan . the gentleman from California and I introduced an earlier bill after the passage of the amendment that would close the 9.5 percent Idophole permanently. completely. immediately and prospectively. not retroactively. and would redirect the proceeds. the savings. to the students that we were intending to benefit all along. . Unfortunately. we have not had an opportunity in committee or on this floor to deal with that bill that would address the problem fully and permanently. and when I heard there was going to be a bill introduced on the other side of the aisle. I thought this is a good thing. it does not matter who has got their name on it. It does not matter whether it is Republican leadership or Democratic leadership. The imdportant thing is to get the job done for the American people. But when we take a look at the bill. it has two very serious problems. One is it does not deal with the issue permanently. Why not? We could do it this year. We could do it now.. Secondly. it does leave a big part of the loophole in place. It would continue to permit lenders to make new 9.5 percenteligible loans using the proceeds from existing 9.5 percenteligible loans through a scheme or process called recycling. Now. the Government Accountability Office has told all of us that -that portion of the loophole accounts for 40 percent of the loss of taxpayers dollars. and here is what the GAO says about closing the loophole. and I quote from their September report: "Indus try experts acknowledge that the govefnment could take action to eliminate the 9.5 percent yieldt for loans made or purchased in the future without compromising the ability of lenders to meet their obligations with respect to their preOctober 1. 1993. tax exempt bonds." EJ 0000 That is what the MillerKildeeVan Hollen legislation does. It shuts it down prospectively. And as the GAO report says. without government action. the taxpayers remain exposed toadditional special allowance payments that can easily and rapidly escalate into billions of dollars. Now. when you. close a loophole. my idea is you take care of the problem all at once. You do not just shut down 60 percent of the hole. allowing 40 percent to continue to drain taxpayer dollars at the expense of students. And that is &what the other bill does. If you were talking about just protecting nonprofits. you would have crafted your bill to deal with just nonprofits. The GAO report makes it absolutely clear that the great bulk of lenders involved in recycling are forprofits. Secondly. if you address the problem the way we do. you will be sure the students directly benefit from th6 savings. 100 percent of the savings. from closing the loophole. not just a portion of the savings of closing the loophole. I would remind my friehds on the other side of the aisle that the original purpose of -the Higher Education Act was to help_ Americas students afford college. It was not to provide gbvernmentguaranteed profits to a few lenders and bond investors. We are missing. unfortunately. a golden opportunity to deal with this once. and for all.