Student Aid And Fiscal Responsibility Act of 2009

Floor Speech

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Mr. GUTHRIE. I rise in opposition to H.R. 3221 because I believe there's a better way to protect students, colleges, and taxpayers. The authors of this legislation will argue that the purpose of H.R. 3221 is to simply stabilize student lending. They claim the Federal Family Education Loan program, or the FFEL, is on ``life support'' and must be replaced with the government-run Direct Loan Program.

The FFEL program has been a stable, reliable source of private capital for student loans for more than 40 years. It provides a choice of loan providers--from large, national lenders to small, local nonprofits--and an array of benefits and services.

Colleges and universities overwhelmingly prefer the FFEL, with 70 to 80 percent of schools consistently opting for the public-private option.

Dr. Gary Ransdell, president of Western Kentucky University, has told me that the end of the FFEL program would, ``mean the loss of financial literacy programs, college access programs, default aversion programs, borrowing benefits, and other support services.''

Further, Dr. William Huston, president of St. Catharine College, a small, independent private college in my district, has shared his concerns about the impact the policy shift will have on schools of his size. He said the shift, ``would mean investing staff time and money to change systems and processes at a time where budgets have been cut to the core.''

Clearly, the rush to the Direct Loan Program will have a major impact on schools and students.

Now, it is true that the FFEL program was hit by the global market collapse that rocked our economy last year--and when that happened, student loan capital dried up, along with the capital across all sectors. And when stability was needed, Congress stepped in.

Last year, Congress passed the Ensuring Continued Access to Student Loans Act, or ECASLA, which provided a temporary Federal backstop to protect borrowers from loan disruption. This program has worked exceedingly well, and to my knowledge, not a single borrower has been left without a loan. The program is still in place today, and if our goal is simply to stabilize student lending, there is a simple solution: we should extend programs under ECASLA to retain the Federal backstop until the economy rebounds.

These programs are working today, which means there would be no confusion for schools and no uncertainty for borrowers if we were to simply extend this program while the market remains turbulent. In fact, Republicans had offered a plan that would exactly do that.

Later today I will join Ranking Member KLINE to offer an alternative to H.R. 3221. Our plan extends ECASLA through 2014, aligning it with other programs under the Higher Education Act. In the meantime, we are calling for a commission to study student loan programs and propose alternatives that will protect borrowers and taxpayers alike. Simply put, our plan is a way to slow down and take a more thoughtful, reasonable approach to long-term student loan reform. Instead, we're going to vote on a plan that will reshape the way students pay for college in this country and radically expand the Federal Government in the process. Proponents of this bill claim it saves $87 billion for taxpayers.

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Mr. GUTHRIE. In reality, that $87 billion is a combination of savings and government earnings that come because the Federal Government charges students a higher interest rate than it costs to borrow, turning student loans into a profit-making venture for the government. And what do we do with this $87 billion? We are taking student money and spending much of it on an array of new government programs.

Students and schools will lose the value of choice, competition and innovation. Meanwhile, taxpayers will be on the hook for massive new entitlement spending and a huge expansion in government borrowing to finance loans that now need to be made directly from the Federal Treasury.

I urge my colleagues to join me in voting ``no.''

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Mr. GUTHRIE. Madam Chairman, this amendment may do a number of positive things to improve the bill, but at its heart I still have significant concerns.

Specifically, I have concerns about the impact of this bill on the deficit and jobs all across the country. We have heard from the Congressional Budget Office since the introduction of this bill, since the bill was originally scored, that there are a number of hidden costs included. No matter how we look at it, this bill will not save $10 billion over 10 years. In fact, we believe that the cost of this bill is at least $15 billion, a $15 billion cost that will go towards the deficit, not towards deficit reduction.

Finally, I am very concerned about the implication on the unemployment rate in my State. We are federalizing one more private sector program and eliminating all the good work being done throughout the country by the private sector. This could mean as many as 30,000 jobs being lost nationwide, approximately 500 in my State, the Commonwealth of Kentucky, all because we decided to kill this program rather than figure out a viable solution.

The services being provided by guarantee agencies and lenders will not be continued at nearly the same level when these entities are required to enter into contracts with the Federal Government. We have already seen the impact of these contracts. Earlier this year, the Department of Education contracted out the servicing function of the Direct Loan Program for four servicers. The low contract price ensured that most of these servicers will only be able to provide bare-bones compliance with the law, not the robust services that were previously provided by the private sector.

In short, I am very concerned about the true impact of this bill. Unfortunately, we will not recognize the impact until this bill has been implemented, and then it may be too late.

I urge my colleagues to oppose the amendment.

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