College Cost Reduction and Access Act--Conference Report

COLLEGE COST REDUCTION AND ACCESS ACT--CONFERENCE REPORT -- (Senate - September 07, 2007)

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Mr. ENZI. Mr. President, I yield myself whatever time I take, and I do rise to speak in support of the conference report under consideration today.

I thank the Senator from Massachusetts and his staff for their participation and the way they kept us informed during the conference. I have to say ``kept informed'' because we were not at the conference, except for the one kind of superficial meeting we had where we got to make speeches, but they did a good job of keeping us informed. This seems to be the way that reconciliation happens. I know when the Republicans were in the majority that is the way it happened, so I am not surprised that when the Democrats are in the majority that is the way it happened. But it was very helpful to be kept informed on what was happening.

There are quite a few things that the reconciliation bill does, but I have to mention that without the reauthorization package it is very incomplete. We are urging the House to hurry and do the reauthorization part so that we truly have a higher education package. Without that, there are a lot of things that are left out, and I will go into that a little bit this morning in more detail following the vote.

This isn't the first time we have reduced the subsidies to lenders and provided greater benefits to students. Two years ago, in the conference that I was referring to, we produced a report that found billions in savings by further reducing subsidies to lenders and applied those savings to increased grants for low-income students, expanded loan forgiveness, and reduced interest rates on undergraduate subsidized loans.

We all agree if there is an excess subsidy in the student loan program, it should be eliminated. The key question is how much excess there is and how to eliminate it. There are no clear-cut answers to these questions. One approach included in this conference report is the reduction of the special allowance payments to the lenders.

I am pleased that we retained the provisions that recognize the unique role that our not-for-profit lenders have in providing information and services to students and their families. Not-for-profit lenders focus on communities and they serve students locally. For this reason, we maintained the 15-basis-point differential cut in the special allowance payments between for-profit and not-for-profit lenders. The cut in the special allowance payments to for-profit lenders is 55 basis points, and for not-for-profit lenders it is 40 basis points.

Now, we took a first step in this conference report toward refining the way those levels are determined by including an auction pilot that lets the marketplace determine the appropriate level for the Parent PLUS Program, which is about 10 percent of the loans.

This conference report provides additional need-based grant aid which is a critical component of increasing access to and the affordability of college. Over 55 percent of the savings are dedicated to increasing the Pell grant award. In the next 5 years, low-income undergraduate students will see the maximum Pell grant award increased by more than $1,000. Additionally, we increase the income protection allowance so that students are not penalized for working and saving for college, and we raise the income threshold for automatic eligibility for a maximum Pell grant.

I am also pleased we were able to retain the guarantee rate on student loans at 97 percent for all lenders through fiscal year 2012. In this way we avoid the disruption in the student loan market and ensure that students have access to Federal student loans. However, I wonder if we may be going too far in cutting the support for the largest Federal financial aid program, the Federal Family Education Loan Program. The challenge we face is that we will not know until it is too late whether cuts we have made have undermined the stability of the program and created hardships for the students it serves.

Despite the emphasis on increased grant aid, the claim of increased savings for borrowers has a hollow ring. Reducing student loan interest rates is a good sound bite. It doesn't do anything to help students pay tuition bills.

Further, in reality, cutting the interest rate in half, to 3.4 percent, will help only a small group of borrowers for the loans they take out for 1 year of their education, 4 years from now. Then the benefit disappears. That is going to be a surprise to a lot of people, and it has already happened once. We were chastised when we were doing the last reconciliation for a raise in the interest rates. That is because the interest rate that had been lowered expired and there was not the money to do the further cut. This may well happen again.

A quick calculation of the real benefit borrowers will receive shows that at a cost of $6 billion to taxpayers, individuals, will see a savings of only $6 a month. That may be one latte; it may be two lattes. It is kind of hard to tell in today's market in coffee. I am astounded. I remember the days when it was a nickel a cup. I would much rather see the $6 billion go to help real low-income students through a Pell grant increase than just for a hollow sound bite.

Finally, as an accountant and member of the Budget Committee, I would be remiss if I didn't point out that we are debating a conference report on reconciliation, and that is a process designed to reduce the Federal deficit, not to create new mandatory programs and increase entitlement spending. I am disappointed to say that the net savings for deficit reduction in this conference report is only $750 million.

I wish to remind my colleagues that a few weeks ago, we considered reconciliation and higher education reauthorization together. The Senate did it right. We voted on reconciliation one day, and the next voting day we had, we covered reauthorization. Both bills passed with strong bipartisan support because we not only achieved savings but we ensured the quality and effectiveness of our Federal student aid programs. Therefore, my support for this conference report is limited by the fact that we are not also considering the larger higher education reauthorization package.

We have used this chart before when we were debating the reauthorization. This chart shows the pieces that are left out when we do not do the reauthorization. I urge the House to finish up this part of the package so that it can accompany the reconciliation package. It is not complete without both.

I do have some comments by House Ranking Member McKeon, which is an excerpt from the conference committee when it was held. I ask unanimous consent to have it printed in the Record.

There being no objection, the material was ordered to be printed in the RECORD, as follows:

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Mr. ENZI. It puts the emphasis on some things that will be left out if we do not do it and also some things that I mentioned.

I want to add some more emphasis to what is not before us today, and that is the legislation that addresses the concerns about rooting out the bad actors in student lending. It doesn't include protecting students and families who are borrowing money for college, and ensuring that students and parents receive sound, honest advice about their student loans. Students and parents must have access to the information they need to understand and manage their debt. We must ensure that the investment our students and families make in terms of time and money is a good one, that they are confident there will be financial aid to assist continued access to a college education.

Further, it is the reauthorization bill that contains the evaluation of the auction pilot that will help determine whether the auction model should be used in the future to establish viable special allowance rates. That is the way to test it.

Higher education is the onramp to success in the global economy, and it is our responsibility to make sure everyone can access that opportunity and reach their goals. The choice of whether to pursue a postsecondary education is no longer an option. We need to make sure individuals have all the tools they need to understand and shape their future. This conference report provides some important tools but not nearly enough to complete the job.

We are only seeing a fraction of the higher education picture by considering the conference report separately from the larger reauthorization package. What is before us today focuses only on a narrow slice of the Higher Education Act, one piece which is dependent on other foundational programs that are not part of the reconciliation. You can see that on this chart: Reconciliation takes care of a little bit; reauthorization takes care of the rest.

It takes important steps to increase assistance for students seeking a college degree, but it is only a Band-Aid without the important bipartisan reforms included in the reauthorization bill. We are cutting the bottom line without dealing with the quality and substance of these important programs.

The American success story of higher education is at risk of losing the very qualities that made it great--competition, innovation, and access for all. Our challenge is to make higher education more accessible, affordable, and accountable. By considering only reconciliation, we are not meeting this challenge head-on. We are leaving the job undone.

But we need the provisions in the reauthorization bill--better college cost information to help parents and students make sound choices; year-round Pell to reduce time-to-degree; and FAFSA, which is the Free Application for Federal Student Aid. It is a document that has been rather intimidating to students as they think about filling out this form in order to qualify for financial aid. The form itself has kept people from applying. We have reduced that in the reauthorization bill to a one-page document.

I reiterate, it is the reauthorization bill that contains all the reforms and accountability provisions to address the problems that have come to light in the loan programs--the bad actors with conflicts of interest, the lack of useful, necessary information to enable borrowers to make informed decisions about loan provisions and repayment, and the need for better controls over access to the National Student Loan Data System so borrowers' privacy is protected.

We know America's ability to compete in a global economy depends on increasing the number of students entering and completing college. But of the 75 percent of high school seniors who continue their study, only 50 percent of them receive a degree in 5 years after enrolling in college and only 25 percent of them receive a bachelor's degree or higher. These numbers are even worse for students from low-income families. It is important to ensure that more students enroll in college prepared to learn and that more students have the support they need to complete college with the knowledge and skills to be successful. Low-income students who are striving to attend college need to know there is financial aid available for them to access college or career and technical education. It is the reauthorization bill that has all the support programs for first-generation and low-income students and the institutional support programs for minority-serving institutions.

For years, institutions of higher education and employers have expressed their dissatisfaction about the fact that our high school graduates need remedial help in order to do college-level work or to participate in the workforce. Nearly one-third of entering college freshmen take at least one remedial course. Each year, taxpayers pay an estimate $1 billion to $2 billion to provide remedial education to students at our public universities and community colleges.

What will help this situation? Not only do students need better guidance selecting courses in high school that will enable them to succeed in the postsecondary education, they need better prepared teachers. It is the reauthorization bill that has the partnership programs to support teacher preparation so that all children have qualified teachers to guide their learning experiences. Also, to be competitive in the global economy we need to be able to communicate with people all over the world. It is the reauthorization bill that authorizes the programs that support foreign languages and international education.

I began my remarks by stating that I am in support of the conference report. It is clear that I am equally committed to seeing that we reauthorize the Higher Education Act. We need both pieces to get it done right.

I thank Senator Kennedy for his commitment to moving the reauthorization forward and including several Republican priorities in this conference report. While this report is not perfect, taken as a whole and with its emphasis on providing additional need-based grant aid to low-income students, I believe we have reached a reasonable approach to helping students pay for college.

I thank everyone who has been involved in the process.

I yield the floor and reserve the remainder of my time.

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