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Kline Statement: Markup of H.R. 3221, the Student Aid and Fiscal Responsibility Act

I have to confess a certain feeling of ‘déjà vu all over again’ as we prepare to vote on yet another budget reconciliation bill that vastly expands the reach of government.

Last week, we approved a plan that sets up the federal government to take control of our health care system. This morning, we’ll be voting on a bill that will put the federal government in complete control of student lending. We’ve already seen the federal government step in and take control of banks, insurance companies, and even iconic American auto companies. I have to ask: Is there any industry not on the verge of federalization?

We’ve been told the Federal Family Education Loan program is “on life support” and this move to 100 percent direct lending is inevitable. But Mr. Chairman, I see things a little differently. I see a system that – up until last year’s global market crash – has provided an uninterrupted source of capital for students and families for more than 40 years.

This push for 100 percent direct lending is not a response to global market instability. It’s just the latest salvo in a battle that has raged on for the last decade and a half between those who see value for the private sector in student lending and those who would prefer to have the federal government in charge.

I’m not arguing that the FFEL program is perfect. I have yet to see a federal program that is. But on the whole, I believe students and schools benefit from the choice, innovation, and competition that only the private sector can deliver.

I also believe taxpayers benefit from the public-private partnership that is the hallmark of the FFEL program. When the market is functioning properly, FFEL lenders generate roughly $70 billion per year in private capital. That’s $70 billion we don’t have to borrow from China and our other debtors around the world.

And even when the market is not functioning properly, the FFEL program can still benefit taxpayers. Last year, Congress worked in a bipartisan fashion to enact the Ensuring Continued Access to Student Loans Act, which we call ECASLA. The Office of Management and Budget tells us ECASLA is actually earning money for the federal Treasury – to the tune of about $6 billion per year.

I certainly don’t see ECASLA as a permanent solution. A substantial portion of FFEL loans are made with federal dollars under this model, which is not my ideal funding framework. At the same time, ECASLA is proof positive that we can find bipartisan solutions that maintain stable access to loans, protect taxpayers, and preserve a real role for the private sector.

Unfortunately, that’s not what we’re doing here this morning. Instead, we’re voting on yet another government expansion initiative that crowds out the private sector in the name of a bigger, more intrusive federal government.

It’s not just student financial aid, either. This bill puts the federal government in the school construction business. It dramatically expands our role in the daycare and early childhood education business. It puts us in the distance education business, and it dramatically reshapes our approach to job training through new community college initiatives.

Every one of these initiatives carries a multi-billion dollar price tag. And as we all know, once created, federal programs simply never go away. That means we’re creating perpetual new entitlement spending at a cost of billions of dollars per year.

I don’t have to remind anyone in this room that the federal deficit is at its highest level ever – approximately $1.8 trillion this year alone. But perhaps I do have to offer a reminder about the process we’re supposed to be following to approve this bill.

We received instructions from the Budget Committee to pass legislation that will reduce the deficit. And while the majority can show a savings of approximately $10 billion over 10 years on paper, I can’t help but feel the American people are getting duped.

Budget reconciliation is supposed to be a tool to get entitlement spending under control. Instead, we’re creating vast new entitlement programs at every stage of life, from cradle to grave.

There is a better way to stabilize the loan program, chart a path for long-term student loan reform, invest in financial aid, and reduce the deficit. Republicans will offer such a plan today, and we hope our Democratic colleagues will join us in supporting this alternative. Enough is enough. It’s time for a little more bipartisanship, and a lot less government intrusion. 


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