Date: 2007-05-09
Speaker: GEORGE MILLER (democrat)
Chamber: H
State: California

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 Nations 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 longterm goal o~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 evermounting 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. alist 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 student 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 werent 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 4iceberg. 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. E 1030 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. a~ain. RUBI N 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 risksharing 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. Its 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.