Student Loans: Proposals for Reauthorization

Publication Date: July 1998

Publisher: Library of Congress. Congressional Research Service

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Research Area: Banking and finance; Education

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Abstract:

The Higher Education Act of 1965 (HEA) is being considered for reauthorization in the 2nd session of the 105th Congress. Title IV of the act authorizes the two major student loan programs, the Federal Family Education Loan (FFEL) program and the Direct Loan program, which are the largest source of aid for students. Proposals for reauthorization assume the continued existence of both programs; issues center around student loan interest rates, other terms and conditions of loans in both programs, and guaranty agency financing in the FFEL. Both House and Senate authorizing committees have marked up HEA reauthorization bills that include student loan provisions. Both H.R. 6 and S. 1882 would, among other things, establish a new interest rate formula that would give students a rate comparable to that which is scheduled in current law to take effect July 1, 1998, while assuring lenders of a higher return. Both bills also include provisions to restructure guaranty agency financing. H.R. 6 passed the House on May 6, 1998. On May 22, 1998, both House and Senate passed the conference report on H.R. 2400 (the Transportation Equity Act for the 21st Century) which includes a provision temporarily authorizing the compromise interest rate formula (as specified in H.R. 6 and S. 1882) for Stafford and PLUS loans from July 1, 1998 to October 1, 1998; the President signed this into law in June. For more information on reauthorization, see CRS Issue Brief 98004, The Higher Education Act: Reauthorization by the 105th Congress. This report will be updated periodically.