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News Now

Washington
Education bill with CUNA-sought changes signed into law
WASHINGTON (8/19/08)—President George W. Bush last week signed the Higher Education Opportunity Act into law. The new law includes two changes sought by the Credit Union National Association (CUNA) during the legislative process. The act reauthorizes the Higher Education Act of 1965 for the first time since 1998. The 2008 package made significant amendments to the original law, which governs federal higher education programs, including financial assistance for students. As different versions of the bill made their way through the House and Senate in July and early August, CUNA worked with Capitol Hill legislative staffers to ensure two changes were included before final passage by both houses of Congress. The new act requires lenders and colleges to adopt strict codes of conduct for their student lending programs. A concern was expressed that the bill, as originally passed by the House, may have prevented university-sponsored credit unions from using the name of their educational institution in marketing the lender’s private educational loans. CUNA sought and received language that should provide credit unions that are named for a university sufficient latitude to market their student loans-- provided that they do not imply that the loan is made by the university and not the financial institution. Also, CUNA won for credit unions an exemption to a 50% rule that the act granted national and state-chartered banks. Specifically, the bill imposes a 50% limitation stating that an eligible lender cannot have as its primary credit function the making or holding of federal student loans. Under the House-approved version of the bill, Federal Family Education Loan Program (FFELP) loans may not represent more than 50% of a lender's consumer credit loan portfolio, including home mortgages. The bill provided an exemption for national banks with assets under $1 billion and CUNA secured that exemption for credit unions.


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