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State of Vermont

House of Representatives

Montpelier, Vermont

Joint House Resolution

J.R.H.  45

Joint resolution urging Congress to repeal the planned Competitive Loan Auction Pilot program for the Federal Family Education Loan program’s PLUS LOANS to parents

Offered by:  Representatives Obuchowski of Rockingham, Ancel of Calais, Heath of Westford and Westman of Cambridge

Whereas, the Higher Education Act of 1965 represented a major milestone in the expansion of the availability of a college education for millions of American youths, and

Whereas, an essential element in extending the affordability of a college education has been the availability of federally guaranteed loans through the Federal Family Education Loan program, and

Whereas, in the summer of 2007, Congress passed and the President signed an amendment to the Higher Education Act of 1965, Public Law 110-84, known as the “College Cost Reduction and Access Act of 2007,” and

Whereas, although this legislation contained many improvements to the accessibility and affordability of federal financial assistance, in the form of both grants and loans, for the nation’s college students, one extremely troublesome aspect of the Act is Section 701, directing the U.S. Secretary of Education to establish a “Competitive Loan Auction Pilot Program” that would require all of the prequalified participating lenders in each state of PLUS loans to parents under the Federal Family Education Loan program to submit a bid to serve as one the state’s two exclusive lenders of these loans, beginning in July 2009 for all new loan applicants, and

Whereas, the two lowest bidders would be designated as the exclusive PLUS loan originators in their respective states for a two-year period, and

Whereas, although the auction process would not be applicable to the lending of PLUS loans to graduate students or federal Stafford Loans, or to the interest rate on PLUS loans charged to parents, it could significantly impair parents’ accessibility to PLUS loans, and

Whereas, the auction process proposed under the Act is to be based on the procedure that the Federal Communications Commission uses to award certain frequencies on the broadcast spectrum, and

Whereas, the Center for American Progress has stated that the FCC spectrum auctions “neither serve the public interest nor realize the promised market efficiencies” and “have systematically resulted in market concentration and the growth of oligopolistic market power of major actors in the telecommunications industry,” and


Whereas, the National Association of Student Financial Aid Administrators has stated in a discussion paper that “loan auctions are riddled with problems for both taxpayers and borrowers,” and the paper predicts that families of college students who do not qualify for sources of need-based aid other than PLUS Loans “will be the biggest losers . . . and may be stuck with higher costing student loans,” and

Whereas, a 2001 study by the U.S. General Accounting Office suggested that “the diversity of lenders would likely decline” were an auctioning system for PLUS loans adopted, and

Whereas, the adoption of the auction system serves no beneficial purpose and will possibly add new financial burdens on the families of college students, now therefore be it

Resolved by the Senate and House of Representatives:

That the General Assembly urges Congress to repeal the planned Competitive Loan Auction Pilot program for the Federal Family Education Loan program’s PLUS LOANS to parents, and be it further

Resolved:  That the secretary of state be directed to send a copy of this resolution to the members of the Vermont Congressional Delegation. 




____________________________              Attested to:

Gaye R. Symington

Speaker of the House


____________________________              ____________________________

Brian E. Dubie                                             Donald G. Milne

President of the Senate                               Clerk, House of Representatives



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont