May 9, 2007

House of Representatives Expected To Pass Amended Student Loan Sunshine Act Today

Posted in Student Loan News, The Financial Aid Process at 7:33 AM by Joe From Boston

Here’s interesting news from NASFAA, the National Association of Financial Aid Administrators:

House Expected To Pass Amended Student Loan Sunshine Act

Today, the House of Representatives is expected to vote on, and pass, an amended version of the Student Loan Sunshine Act (HR 890) which is virtually identical to a bill (S. 486) introduced on Feb. 1 by Health, Education, Labor, and Pensions Chairman Edward Kennedy (D-MA). The amended version differs slightly from the original bill introduced by Education and Labor Chairman George Miller (D-CA) on Feb. 7 by incorporating Code of Conduct requirements contained in the Financial Aid Accountability & Transparency Act introduced by the Education and Labor Committee’s ranking Republican Howard “Buck” McKeon (R-CA) two weeks ago. A bipartisan agreement between Miller and McKeon on the contents of the bill paved the way for today’s floor consideration.

The revised Student Loan Sunshine Act is being considered using an expedited House floor procedure called the Suspension Calendar. The Suspension Calendar is used for non-controversial bills that are expected to pass overwhelmingly. Debate is limited to a maximum of 40 minutes and, in order to “suspend the rules” (where the term “Suspension Calendar” gets its name) and pass such a bill it must receive at least a 2/3rds vote. Most bills on the Suspension calendar are passed on a voice vote, but if there is a recorded vote, then historically very few such bills do not get the required super-majority vote. If there is a recorded vote on H.R. 890 it will be approved, if not unanimously, then with very few no votes.

According to a summary released by Miller’s office, the proposed amended legislation will “clean up the student loan industry and ensure that students and families will encounter a more trust-worthy student aid system.” A few of the actions specified by the Act to achieve this goal include:

  • Requiring both institutions and lenders to adopt strict codes of conduct that adhere to specific guidelines
  • Banning all gifts by lenders to schools
  • Prohibiting school participation on lender advisory boards
  • Prohibiting risk-sharing agreements between lenders and schools
  • Only allowing preferred lender lists if certain criteria are met
  • Banning staffing of school financial aid offices by lenders
  • Setting specific requirements on private lenders, such as informing students of federal borrowing options before allowing them to borrow private funds, requiring exit counseling with the school’s involvement, providing detailed borrower information including clear Truth-in-Lending statements
  • Setting strict marketing standards, including specific disclosure requirements for schools and lenders.

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