On Jul 22, 2009, by a vote of 30-17, the House Education Committee passed an amended version of the Student Aid and Fiscal Responsibility Act of 2009 (H.R. 3221), which will now be reported to both the full House and the House Budget Committee. This leaves the door open for the bill to pass as stand-alone legislation or be taken up through the budget reconciliation process.
The bill would eliminate the Federal Family Education Loan Program (FFELP) and redirect those savings to increasing the Pell Grant and funding multiple other K-12 and post secondary education programs, including the President's proposed American Graduation Initiative which would pump $12 billion into community colleges and add 5 million new graduates by 2020.
"This legislation will help write the next great education legacy in this country," said Education Committee Chairman George Miller (D-CA) in his opening remarks. "All of these reforms are paid for by making common sense changes to the student loan programs."
The beginning of the hearing focused almost exclusively on the debate to move all schools into the Direct Loan program. Republicans offered an amendment to retain the FFEL program by extending the Ensuring Continued Access to Student Loans Act (ECASLA) through 2014 and another amendment to delay the elimination of FFELP until a study could be conducted to gauge possible job losses.
"This legislation vastly expands the reach of the federal government," stated Ranking Member John Kline. "I have to ask: Is there any industry not on the verge of federalization?"
Supporters of Direct Lending responded that the concerns about moving to 100 percent Direct Lending are largely overblown.
"We are not nationalizing the federal student loan program," said Rep. Thomas Petri (R-WI). "Rather, we are eliminating the federal loan program that has been fraught with scandal, is an unreliable source of funds, and costs billions more for taxpayers."
Petri also pointed to a recent survey released by NASFAA at the NASFAA National Conference that showed that most of the schools that have moved to Direct Lending in the last year said the conversion process was easier than they expected.
Representative Tim Bishop (D-NY) also weighed in on the claim that eliminating FFELP would cost jobs, stating that existing FFELP loans would need servicing far into the future and that the government will continue to contract with servicers on new loans made through the Direct Loan program.
The markup hearing went on for several hours as committee members introduced a whopping 25 amendments to the proposed legislation. The proposed amendments covered a wide variety of topics ranging from pre-K issues to special education funding to water conservation in new campus construction. Seven of those amendments were either rejected through a committee vote or were withdrawn by their sponsors. Only a handful of amendments specifically dealt with Title IV funding.
A brief summary of the selected Title IV amendments that were adopted follows:
Manager's Amendment Submitted by George Miller (D-CA)
Loan Forgiveness for Servicemembers Activated for Duty Submitted by Susan Davis (D-CA)
Veterans Educational Equity Supplemental Grant Program Submitted by Howard "Buck" McKeon (R-CA)
Extend Investment in HBCUs by Reuben Hinojosa (D-TX) (Cosponsored by Representatives Grijalva, Scott, Payne, Hirono, & Wu)
Changes to the 90/10 Rule Submitted by Robert Andrews (D-NJ)
Publication Date: 7/22/2009