Student Aid And Fiscal Responsibility Act Of 2009

Floor Speech

Madam Chair, I rise to support H.R. 3221, the Student Aid and Fiscal Responsibility Act of 2009. I'd also like to commend my colleague from California, Chairman George Miller for his hard work to bring this bill to the floor today.

Now more than ever, Americans need affordable and quality educational opportunities that will help make our economy stronger and more competitive. This bill embraces President Obama's challenge to produce more college graduates by the year 2020 by making higher education more accessible. This legislation achieves that goal by transforming the way student loan programs operate.

The Student Aid and Fiscal Responsibility Act is the single largest investment in aid to help students and families pay for college in history--and it does so at no cost to taxpayers. The bill reforms the system of federal student loans to save taxpayers $87 billion--and then invests $77 billion of those savings back into education, particularly by making college more affordable, and directs $10 billion back to the Treasury to reduce entitlement spending. Among its many provisions, I am especially pleased that the maximum Pell Grant is increased from $5,350 in 2009 to $5,550 in 2010 and to $6,900 in 2019 and that interest rates are kept low on subsidized federal student loans. This will help more students graduate with less debt. Unfortunately, too many students are graduating with record debt, partly because grant aid doesn't cover nearly as large a share of college costs as it used to. This legislation will allow us to invest $40 billion in the Pell Grant scholarship, to keep interest rates affordable on need-based federal student loans, to simplify the federal student aid application process, and to invest in other forms of aid that will help low-income, middle class and minority students pay for and complete college.

H.R. 3221 will also stabilize and safeguard the federal student loan program that students and families depend on to pay for college. The intertwined economic and credit crises have exposed serious vulnerabilities in the structure of the federally-guaranteed student loan program--putting it on life support. Families shouldn't have to worry about whether the roller coaster fluctuations of the financial markets will hurt their access to low-cost student loans. By originating all new federal loans through the cheaper Direct Loan program, students and parents will be able to receive the same loans with the added assurance that these loans are entirely reliable, no matter what happens in the economy. This simple change will save taxpayers $87 billion over 10 years.

H.R. 3221 also builds on the best of what works in the private sector to provide borrowers with top-notch customer service. The legislation will allow state non-profit lenders and private industry to continue doing what they do best--servicing loans. It will allow private entities to compete for contracts to service these loans--ensuring that students get the best services available and maintaining jobs in communities across the country. This bill also eliminates waste and creates a streamlined, cost-effective program for families and taxpayers. Each year, billions of taxpayers' dollars are being sent into a program that no longer works--and that the Department of Education can administer for a much lower cost. This is exactly the kind of waste we need to eliminate in tough fiscal times. By cutting out the middleman, this legislation will save taxpayers $87 billion over 10 years, according to the Congressional Budget Office. It's a smarter business decision for taxpayers and families.

One of the most exciting provisions of this bill is that is makes an unprecedented $10 billion investment to make community colleges part of our economy's recovery. For years, business leaders have told us there weren't enough workers with the knowledge and the expertise for their specific industries. H.R. 3221 will change that. It will help us build a 21st century workforce by strengthening partnerships among community colleges, businesses and job training programs that will align community college curricula with the needs of high-wage, high-demand industries. It will provide community colleges with the tools to replicate programs that are successfully educating and training students and workers for these fields.

As a former Head Start volunteer coordinator, I know first-hand that creating better educational opportunities demands that we invest in our students long before they reach college. To ensure that the next generation of students enters kindergarten with the skills they need to succeed in school, the legislation creates an Early Leaning Challenge Fund to increase high-quality early learning opportunities for low-income children. It also will help provide every child with access to a world-class learning environment by investing in school modernization, renovation, and repair projects that will create healthier, safer, and more energy-efficient environments--a measure the House is already on record supporting.

However there is one provision that was added to HR 3221 in the Education and Labor Committee that I am very concerned about. I'm sure it was included with the best of intentions, but for the record, I would like to share with my colleagues what I believe will be the real impact of this provision. Under current law, for-profit postsecondary schools are required to maintain a certain formula for how they receive federal funding, commonly known as 90-10. This means that a school must, at a minimum, acquire 10 percent of its funding from sources other than federal money. The original 90-10 provisions were added because too many for-profit schools were receiving large amounts of federal funding from students who indebted themselves without receiving the training they signed up for. I worked with a number of my colleagues here to help put those 90-10 provisions in place. This formula was enacted after years of students being ripped off and schools raking in record profits. If the schools violate 90-10, they are assessed a financial penalty.

The provision added in Committee would weaken the current standards and basically kick the can down the road by extending the violation period from two to three years. This is completely unnecessary. What is the point of having the formula if we'll allow for-profit schools to continue to violate it?

I am looking forward to work with Chairman Miller and other Members to make sure that the final bill does not include another victory for an industry that does not have students' best interests in mind. Moving forward, it is my recommendation that we revisit the rules that govern these for-profit schools and allow them to continue accessing federal funds but that also ensure that they fully report graduation and dropout rates, default rates, and job placement rates.

In closing, this is not a perfect bill, but it is a tremendous investment in education for American families and I urge my colleagues to vote for passage on H.R. 3221, the Student Aid and Fiscal Responsibility Act of 2009.

Source