FINAL BILL REPORT

HJM 4015

BYRepresentatives Prince, Jacobsen, Miller, Basich, Wood, Van Luven, Doty and Baugher

Regarding student loans.

House Committe on Higher Education

Senate Committee on Higher Education

AS PASSED LEGISLATURE

BACKGROUND:

Financial aid officers at institutions of post-secondary education determine whether a student is eligible for various financial aid programs.  One of their duties is certification of student eligibility to participate in the federal Guaranteed Student and PLUS Loan Programs.  However, financial aid officers do not have the authority to deny these loans to a student who qualifies as needy.  Once a student is certified as needy, he or she may be granted a loan by banks participating in the loan programs.

The federal Department of Education has proposed restricting institutional eligibility to participate in federal student financial aid programs.  If the proposal is adopted, students enrolled on campuses where previous students have defaulted on Guaranteed Student Loans at a high rate would not be eligible for any federal financial aid.  This proposal would penalize students currently enrolled, even though they had no control over the actions of previous students, and aid officers on their campus had no power to grant or deny loans to those defaulting students.

One of the reasons for the high default rates is that, as an ever increasing percentage of federal aid resources are devoted to loan programs, some students are acquiring excessive loan burdens.

SUMMARY:

Members of the Legislature ask Congress to permit institutions of higher education to deny the certification of federal student loan applications by students who have acquired excessive loan burdens.  Congress is also requested to provide other self-help programs, such as work-study programs, for those needy students.

VOTES ON FINAL PASSAGE:

      House 98   0

      Senate    37     8