HOUSE BILL REPORT

HJM 4015

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

Regarding student loans.

House Committe on Higher Education

Majority Report:  Do pass.  (13)

      Signed by Representatives Jacobsen, Chair; Spanel, Vice Chair; Van Luven, Ranking Republican Member; Basich, Doty, Fraser, Inslee, Jesernig, Miller, H. Myers, Prince, Rector and Wood.

Minority Report:  Do not pass.  (1)

      Signed by Representative Heavey.

House Staff:Susan Hosch (786-7120)

AS PASSED HOUSE MARCH 13, 1989

BACKGROUND:

Financial aid officers at institutions of postsecondary 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, they do not have the authority to deny these loans to any student who qualifies as needy.  Once a student is certified as needy, they 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 to students enrolled on campuses where previous students have defaulted on Guaranteed Student Loans at a high rate.  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 those 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 Washington Legislature ask Congress to permit institutions of higher education to deny the certification of federal student loan applications to 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.

Fiscal Note:      Not Requested.

House Committee ‑ Testified For:    John Klacik, Higher Education Coordinating Board; and Greg Anderson, Associated Students of Western Washington University.

House Committee - Testified Against:      None Presented.

House Committee - Testimony For:    Institutions with a default rate of 20 percent or more in the Guaranteed Student Loan Program are in danger of losing all federal aid programs.  Students attending 14 Washington institutions are in danger of losing federal aid, through no fault of the current student body.  Students who must use between 10 to 15 percent of their yearly income to repay their student loans are in the most danger of defaulting on those loans. If institutions are to be held accountable for a student's future actions, they should have some ability to influence that action.

House Committee - Testimony Against:      None Presented.