Senate Passes Higher Ed Reconciliation Bill

Just before 1:00 AM on Friday, July 20, the Senate passed H.R. 2669, the College Cost Reduction Act, by a vote of 78-18. The bill, which cuts more than $18 billion in subsidies to student lenders, passed with no substantial amendments. The House passed its companion bill last week, with a slightly larger cut, so the bill now heads to conference. The main hurdle in the Senate centered on an amendment that would reduce the cuts by about $3 billion.

Sens. Richard M. Burr (R-NC) and Ben Nelson (D-NE) offered an amendment that would wipe out $2.4 billion of the lender subsidy cuts proposed in H.R. 2669, most of which would be redirected to aid student borrowers. The Senators argued, and some opponents conceded, that Congress could not be certain that the subsidy cuts would not force certain lenders out of the industry. Rather than take that chance, the two Senators felt the more prudent course of action would be to scale back the proposed cuts.

However, Sen. Edward Kennedy (D-MA), the bill’s sponsor, claimed the amendment would cut the $800-per-person Pell grant increase down to a $300 increase or less. The amendment would call for the difference to be made up using appropriations, but Sen. Kennedy pointed out that this is not a reliable approach because there is no requirement that these funds be provided. The amendment was defeated 61-36.

The bill now goes to conference, where reconciliation between the major differences will prove challenging for negotiators. The biggest difference is in the House bill, passed last week, which halves the interest rates on subsidized student loans, from 6.8% to 3.4%. This rate cut is part of House Democrats’ “Six for ’06” agenda that House Education and Labor Chairman George Miller (D-CA) seems unwilling to sacrifice.

While Sen. Kennedy is likely to be equally stubborn on Senate provisions, such as auctioning the right to offer federally backed PLUS loans to parents, the Senate measure has factors working in its favor. The President has already offered a veto threat on the House bill, while only expressing “serious concern” with the Senate bill. The fact that the White House has not threatened the Senate version, and in fact has offered to negotiate, gives Senate conferees the upper hand in negotiating with the House.

Resources:
Doug Lederman, "Senators Side With Students," Inside Higher Ed, July 20, 2007.
Libby George, “Private Lender Subsidy Cuts Hold Up,” CQ Today, July 20, 2007.
Stephen Langel, “Education Bill Overwhelmingly Passes Senate,” Congress Now, July 20, 2007.
Author: SAS