House Passes Higher Education Reconciliation Bill

On Wednesday, July 11, the House passed H.R. 2669, the College Cost Reduction Act, by a vote of 273 to 149. The reconciliation bill, mandated in the fiscal year 2008 joint budget resolution, cuts $19 billion in federal subsidies to student lenders over five years, while increasing grants for needy students and halving interest rates on federally backed loans with the savings. The bill would also create nine new entitlement programs, including grants for students who become public school teachers, loan forgiveness for certain public-sector employees, income-contingent loan repayment, grants for certain minority-serving institutions and matching grants for companies’ philanthropic efforts to improve college access and retention. Democrats and Republicans engaged in impassioned debates over the entitlement programs and subsidy cuts over the course of two hours on the House floor.

After debating the underlying bill, which increases the maximum Pell grant to $5,200 over five years, cuts interest rates on subsidized student loans in half to 3.4 percent and increases the federally backed loan limit for undergraduate studies by $7,500, to $30,500, Rep. Howard “Buck” McKeon (R-CA), the ranking Republican on the House Education and Labor Committee, brought a substitute amendment up for debate. The substitute would have reduced subsidies in the loan programs and invested most savings in the Pell Grant program by providing increases of $350 in 2008 and $100 each year thereafter. After sixty minutes of heated discussion, the amendment was defeated, 189-231.

“This bill is disguised to reduce the federal deficit, but it creates nine new entitlement programs,” Rep. McKeon stated. Citing a cost of $32 billion after five years, Rep. McKeon noted that President Bush has pledged to veto the bill as it stands. However, the Bush administration proposed cutting lender subsidies earlier this year, so there is still a small chance the bill may become law. In the time it takes for the Senate to pass their version of the bill and go to conference, Congressional leaders have ample time to reach an agreement over the entitlements.

Resources:
Jennifer Bendery, “House Passes Student Aid Bill, Despite White House Veto Threat,” Congress Now, July 11, 2007.
Diana Jean Shemo, “House Passes Overhaul Plan on Student Aid,” New York Times, July 12, 2007.
Author: DAD, SAS