WASHINGTON, DC | September 16, 2009
Government takeover. We’ve seen and heard a lot of those two words lately – in the credit markets, the banking sector, the automotive industry, and even the building of our schools.
Then there’s health care, an industry that assumes one-sixth of America’s gross domestic product. We’re not talking about health care today, but perhaps we should be.
The vote we’ll take on student lending is the culmination of a plan set in motion more than a decade and a half ago – and one that bears an eerily strong resemblance to the health care debate that rages on today.
In 1993, Congress created a so-called government option for college loans. The idea of this Direct Loan program was to introduce competition and hold down costs – sound familiar?
Just 16 years later, we’re about to vote on a plan that would completely and permanently eliminate the private sector’s role in originating and raising capital for federal student loans. In its place will be a one-size-fits-all federal loan model that requires the U.S. Treasury to directly lend tens of billions of dollars each year – tens of billions we do not have, and will be forced to borrow.
So why is Congress intervening to declare one program the winner? If it’s truly about competition, the best program ought to win in the marketplace. In fact, one program has won – the public-private partnership of the Federal Family Education Loan program, which is the choice of three-quarters of colleges and universities today.
By eliminating the FFEL program, we will lose the choice, competition, and innovation of the private sector. That includes everything from technological innovations to loan discounts and borrower services.
We will also lose jobs – an estimated 30,000 or more in congressional districts from coast to coast.
And what are we getting in return? My colleagues on the other side of the aisle tout this legislation as being fiscally responsible. Respectfully, I beg to differ.
The bill is awash with new entitlement programs – including a new early childhood program to develop and fund programs at the state level; a new program to build and renovate schools; and a new program to bolster community colleges and involve the federal government in developing online curriculum.
Add to these new programs the costs of expanding Pell Grants, funding for Minority Serving Institutions, and the Perkins loan program, and we have on our hands a massive entitlement spending spree.
This spending is allegedly paid for by $87 billion in so-called savings from elimination of the FFEL program, Unfortunately, the numbers just don’t add up.
CBO tells us the bill will require $13.5 billion in new discretionary spending – real money that simply isn’t counted in the mandatory score. CBO also tells us that using current figures, the Pell Grant expansion will cost $11.4 billion more than scorekeepers originally predicted – again, a cost not counted in the “official” score.
That means this bill will cost closer to $15 billion over the next 10 years – and when market risk is factored in, the cost spikes to nearly $50 billion.
Madam Chair, there is a better way. Later in the debate, I will join the Ranking Member on the higher education subcommittee in offering an amendment to stabilize student lending by extending programs approved on a bipartisan basis last year.
With this plan, we can put $13 billion toward deficit reduction and – most importantly – we can convene a nonpartisan commission to study long-term structural changes to our student lending systems. In short, it’s a thoughtful, reasonable approach to determine what’s best for students, schools, and taxpayers alike.
I urge my colleagues to slow down, take a breath, and ask yourself whether another government takeover is what we need right now. I think the answer is a clear no.
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