Statement by Education & the Workforce Committee Chairman John Boehner on House Passage of the Deficit Reduction Act
Legislation Will Expand Student Loan Benefits, Protect Worker Pensions
WASHINGTON, D.C. - U.S. House Education & the Workforce Committee Chairman John Boehner (R-OH) today issued the following statement on the conference report for the Deficit Reduction Act (H.R. 4241):
"This budget is the product of months of hard work, and on balance, I believe it is a positive first step in restoring fiscal responsibility on behalf of all Americans, from students and families to workers and retirees.
"This proposal offers significant new benefits to students pursuing a college education, from lower loan fees to higher loan limits to a simplified financial aid application process. I continue to have reservations about the size of the new entitlement program created in this bill, particularly because our larger effort has been focused on reining in runaway entitlement spending as we work toward reducing the federal budget deficit. While my concerns remain, I am pleased that the new grant proposal is targeted to low-income, high achieving students and particularly those pursing degrees in fields that will help improve American competitiveness.
"Finally, the agreement places the Pension Benefit Guaranty Corporation on more solid financial ground, while the agency faces a significant long-term deficit. This proposal also adds momentum to House and Senate efforts to finish work early next year on comprehensive reforms to our nation's outdated pension laws. Last week, the House took a step closer making these reforms a reality, giving strong bipartisan support to a pension bill that would benefit workers, retirees, and taxpayers alike."
The measure includes provisions to reform federal student loan programs and shore up the Pension Benefit Guaranty Corporation (PBGC) as part of larger efforts to expand college access for low- and middle-income students and protect the retirement security of workers and retirees.
REFORMING STUDENT LOAN PROGRAMS
The Deficit Reduction Act reauthorizes mandatory spending programs under the Higher Education Act (HEA) and includes protections for taxpayers coupled with key benefits for students. The bill generates billions in savings and helps reduce the deficit while directing significant resources to expand college access.
To improve efficiency in the student loan programs, the bill would reduce subsidies paid to lenders, maintain the scheduled move to a fixed interest rate, and make student aid administration more accountable. This includes the elimination of floor income earnings, a complete and permanent closure of provisions that allow for 9.5 percent student loan subsidies, a reduction in lender insurance against default, and a shift of student aid administrative funding to the more accountable discretionary funding structure, similar to all other administrative accounts at the U.S. Department of Education.
The bill provides key student benefits, including lower loan fees, higher loan limits, and expanded grant aid to low-income high achieving students and particularly those students studying key subjects including math, science, and critical foreign languages. These reforms will increase financial aid opportunities for the millions of students who attend college each year with the help of the federal student loan programs.
PROTECTING PENSIONS FOR WORKERS & RETIREES
The Deficit Reduction Act would provide the PBGC with additional much-needed financial resources. The agency currently operates with a long-term deficit of nearly $23 billion, and if the financial condition of the PBGC deteriorates further, the prospect of a multi-billion dollar taxpayer bailout looms large.
While Congress oversees the PBGC, the agency is funded through annual employer premiums rather than tax dollars, but the most common employer-paid premium has not been adjusted since 1991. The bill increases these premiums, paid by employers for each worker participating in its pension plan, from $19 to $30 per participant, beginning in 2006 - the same increase proposed earlier this year by the Bush Administration. The bill also increases the premium paid to the PBGC by managers of multiemployer pension plans from $2.60 to $8 per participant, beginning in 2006. Finally, the legislation establishes an employer-paid termination premium of $1,250 per plan participant for three consecutive years for companies that terminate their pension plans while in bankruptcy. The termination premium provision will sunset after five years.
Boehner represents Ohio's Eighth Congressional District, which includes all of Darke, Miami, and Preble counties, most of Butler and Mercer counties, and the northeastern corner of Montgomery County. He was first elected to Congress in 1990.