Statement of Senator Mike Enzi
Senate Banking Committee Markup of:
The Private Student Loan Transparency and Improvement Act of 2007, the Currency Reform and Financial Markets Access Act of 2007 , and other legislation
August 1, 2007
Thank you Mr. Chairman. We have several important pieces of legislation to consider before the Committee today, so I will be brief in my opening statement.
I would like to thank the Chairman and Ranking Member for their work on this legislation, and for their consideration of my amendments to the Private Student Loan Transparency and Improvement Act and the Commission on Natural Catastrophe Risk Management and Insurance Act.
The inclusion of a waiver for the 30-day "cooling-off period" was critical to this legislation. In many cases, students apply for private student loans as a last resort. They have exhausted their options with federal loan programs and scholarships, and must now fill in the gap with a private loan product. When students reach this point, they need the money disbursed promptly to pay for tuition, books or other educational needs. By providing students with a waiver, we can grant timely access to loan products for students in critical need and still maintain the protections provided by the 30-day window for those who wish to use it. I believe this is a good compromise and that the bill is stronger because of this amendment.
I would also like to mention my second amendment that was not added to the Private Student Loan Transparency and Improvement Act, and my concerns that remain on a provision of the bill.
Last week the Senate passed the Higher Education Amendments of 2007 by a vote of 95 – 0. In putting that package together, Senator Dodd, you and I worked together on the HELP committee to identify how to best protect the interests of students when it comes time for them to make decisions about how to finance college.
I am concerned that we are here today, marking up this private student loan bill, and that there are some provisions in here that may not reflect the work we did on the Senate floor last week.
The HELP committee demonstrated impressive bipartisanship in finding consensus around a number of important steps that should be taken to reign in the bad apples in the student loan industry. The cost of college continues to rise, and if we are going to ensure that all Americans have access to post-secondary education, then students need to have access to the grants and loans that make college possible.
But we also identified the pitfalls. Many students need private loans to attend college. We need to make sure that what we do here today doesn’t hurt those students.
In the reauthorization of the Higher Education Act I worked with you, Senator Dodd, as well as Senators Brown and Allard who are here at the table with us, to simplify the Free Application for Federal Student Aid, we increased the maximum Pell grant, and we expanded Pell grants so they can be awarded year-round.
We were also able to include in that bipartisan package a number of provisions that restrict how universities are able to negotiate deals with banks. There have been some abuses of the system, and we responded to that.
We put in place a Code of Conduct for universities, with new requirements for entrance and exit counseling for student borrowers, and with new disclosure requirements that will ensure students have all the information they need about the interest rates on their loans, the terms and conditions on those loans, and other information they need to make informed decisions about their financial futures.
We were able to get this package through the floor on a 95 – 0 vote.
But I am concerned that this private student loan bill we are looking at today adds even more restrictions and more disclosure requirements. We must exercise caution. We must make sure that we are not drying up the capital students need to attend college. And we must make sure that in our rush to provide students with more information, that we don’t make the financial aid process so complicated that students can’t get through it.
I have particular concerns about what this private student loan bill does on "co-branding". We all agree that universities need to be transparent and that students should be able to make informed decisions about what banks they want to do business with. But I am worried that the language in this private student loan bill goes too far.
We were able to find a good compromise on the co-branding issue in the HELP committee. That compromise focused more on disclosure, than outright banning the practice of co-branding. And then we moved that compromise through the Senate on a 95 – 0 vote. I don’t think we should undo that compromise here, and I hope to work closely with Senator Dodd and Senator Shelby after this markup and before this bill goes to the floor, to improve this bill and make sure it is in line with the work we did on the floor of the Senate last week.
Also, we all worked together in the HELP committee, to incorporate into the reauthorization of the Higher Education Act, an emphasis on financial literacy. I have been a strong advocate for financial literacy because I believe that we must give individuals the tools to understand and shape their future. For example, Senator Sarbanes and I were the authors of the legislation establishing the Financial Literacy and Education Commission to develop a national strategy on financial literacy.
And I am supportive of the provisions in this private student loan bill that aim to improve student financial literacy. But I am concerned that there are some provisions in this private student loan bill that may not reflect that work we did on the Senate floor last week.
So again, I hope to work closely with Senator Dodd and Senator Shelby after this markup and before this bill goes to the floor, to make sure that we are addressing the challenges of higher education in a comprehensive way. And Senator Dodd I thank you for your support moving our higher education bills through the HELP committee, and I hope you and I can see the President sign both of those bills in to law later this year. We must ensure that when all is said and done, students have the tools they need to complete higher education and help them acquire the knowledge and skills to become competitive in a 21st century economy.