U.S. House passed student loan bill
The U.S. House of Representatives passed a bill Thursday that would, if it becomes law, remove private lenders from the student loans business.
The Student Aid and Fiscal Responsibility Act (H.R. 3221) is the adoption of President Obama’s higher education plan and passed 253 to 171.
“No student in America should have to mortgage their future to get a good education,” stated the bill’s author, Rep. George Miller, D-Calif., in a press release. “This legislation provides students and families with the single largest investment in federal student aid ever and makes landmark investments to improve education for students of all ages – and all without costing taxpayers a dime.”
Miller stated the bill would allow students to borrow through a direct loan program set up by the federal government rather than through lenders who participate in the federally-guaranteed student loan program.
According to the Congressional Budget Office, the change in the way the government would administer student loans, if the bill is passed in the U.S. Senate and signed by President Obama, would generate $87 billion in savings to the federal government over the next 10 years.
But there are other provisions to the bill aside from the change in student loans.
According to the press release from Miller’s office, the bill simplifies the FAFSA and provides loan forgiveness for members of the military who are called to active duty in the middle of the academic year. It would also invest $40 billion to increase the maximum annual Pell Grant scholarship to $5,500 in 2010 and eventually raise the amount to $6,900 by 2019, provide $3 billion to bolster college access and keep interest rates on need-based and subsidized loans variable beginning in 2012.
Oklahoma Congressional delegation members Reps. Mary Fallin, R-Oklahoma City, and Tom Cole, R-Moore, voted against the bill calling it another government takeover of a private enterprise.
“Abolishing the Federal Family Education Loan student loan program in order to institute a government-run lending program that pulls dollars from the already overdrawn U.S. Treasury is a mistake,” Rep. Cole, who represents Norman, stated in an e-mail. “This is just another fundamentally flawed government takeover.”
Cole stated the legislation that was passed is similar to the health care bill in that he stated the student loan industry would be destroyed from a “public option.”
“It will cost taxpayers billions, eliminate private jobs and make students and colleges more dependent on the federal government.”
Rep. Fallin stated in a press release that the bill creates more bureaucracy for citizens and turns the U.S. Department of Education into a large bank.
“The government already owns our mortgages, car dealerships and banking institutions,” Fallin stated. “Now they want to control the student loan market as well, managing over $1 trillion in capital over the next ten years and eliminating college financing choices for students. If this bill becomes law, students will be stuck standing in line in another massive bureaucratic system, just like the Internal Revenue Service or Post Office.”
Fallin stated the bill would take 6.7 million students and 4,400 institutions of higher education into one large federal program.