Madam Speaker, in a time when most students graduate with at least $20,000 in debt, it is more important than ever that students can find loans with low interest rates that are easy to pay back. In the best case, students can get federal financial aid. However, more and more students have maxed out that aid and are turning to the private market. Many schools recommend lenders to help students and their families find loans.
Now, most schools do work in the best interest of their students, and choose preferred lenders based on the benefits they can give students. But, as we have seen, some unscrupulous lenders have schemed with certain unscrupulous staff of college loan offices to serve their own special interests rather than the interests of students and their families.
What is worse, the Department of Education knew about these cozy relationships between student loan officials and lenders and did nothing about it. This is indicative of the lack of oversight that has persisted at the Department of Education for the last six years. Some of us in Congress, a few years ago, worked to close a loophole in the federal student loan program that was costing taxpayers millions of dollars. We had to pass a law to force the Department of Education to act – they had refused to issue emergency regulations to stop the subsidy and save money for taxpayers and students.
And now, again, the Department of Education, when faced with a clear conflict of interest between lenders and schools, has failed to respond adequately. Congress must step in to make the rules clear.
This bill does just that. It clarifies appropriate conduct for schools. It encourages private loans to be competitive with federal loans. It makes students more aware of their options by making the student loan market less confusing and more transparent.
Perhaps most importantly, this bill will restore trust between students and their colleges. Students need to be able to trust that their school officials are giving them the best advice in the confusing world of student loans. The provisions of this bill, by requiring schools to disclose exactly how their preferred lenders are chosen, will reassure students and parents that schools are looking out for their best interests.
This bill will help students and parents get the best deal for their money. I encourage my colleagues to vote yes on the Student Loan Sunshine Act, and put in place a system that looks after students’ interests, and is not plagued by special interests.