Oppose Student Aid Cuts in the Budget Reconciliation Bill
OPPOSE STUDENT AID CUTS IN THE BUDGET RECONCILIATION BILL 12/9/2005
December 8, 2005
Dear Colleague:
Please join us in writing to conferees expressing opposition to the cuts to student aid funding found in the House's Budget Reconciliation bill. If these cuts are enacted, they will be the single largest cut in the history of the student aid program.
Before Thanksgiving, the House passed a budget reconciliation package that cuts spending on student loan programs by $14.3 billion over five years through a combination of increases in rates and fees students pay on their loans and reductions in subsidies to lenders. The increased fees students will be paying on their loans include: a new 1% fee on all consolidated loans; a doubling of origination fees from 1.5% to 3% for Direct Loans; and a requirement of a 1% insurance fee on Federal Family Education Loans (FFEL) loans - a fee which many lenders now waive. According to estimates, these changes could cost students up to $5,800 more in interest and fees over the life of their loans.
These student loan cuts come at a bad time for students. According to the Department of Education (ED) and the Bureau of Labor Statistics, the price of college tuition and fees has been rising more rapidly than household income over the past two decades. These student loan cuts will make it more difficult for students and their families to be able to afford the costs of higher education. Furthermore, at a time when studies indicate that the U.S. is falling behind other countries, such as India and China, in preparing students for high-skilled, good paying jobs, particularly those in science, mathematics, and engineering, the federal government should be working toward decreasing, not increasing, higher education costs. Please join us in opposing these student loan cuts.
If you are interested in signing the attached letter, please contact Mark Ratner with Rep. Schwarz at 5-6276 or mark.ratner@mail.house.gov or Andrew Shaw with Rep. Moore at 5-2865 or andrew.shaw@mail.house.gov.
Sincerely,
Joe Schwarz, M.D.
Member of Congress
Dennis Moore
Member of Congress
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Dear Conferees:
We are writing to express our opposition to the provisions in the budget reconciliation bill that cuts $14.3 billion from federal student aid programs---the single largest cut in the student aid program's history.
The $14.3 billion in savings were contributed by the House Education and the Workforce Committee as their part of the House budget reconciliation bill. These cuts were made by: raising student loan interest rate caps; increasing origination fees on direct student loans; raising interest rates on consolidation loans; and, reducing some of the excessive subsidies paid to student lenders.
We understand and appreciate that some changes, such as the elimination of the 9.5% floor-loan formula, need to be made. We are concerned, however, that some of the proposed changes in the House bill will result in the typical student paying $5,800 more for college loans, notwithstanding the fact that the average student is already $17,500 in debt at graduation.
These changes are not simply an additional burden for the Congress to place on students. These cuts may cause some students to drop out and forgo their college degree. For most low-income, first generation and minority students, financial barriers are the principle factor that determines whether or not they will successfully complete college. American students need and deserve more affordable college opportunities, not additional barriers to achievement.
Time and again, we hear from researchers, CEOs and even our own colleagues that investing in our nation's education system is the key to improving America's global economic competitiveness. The proposed cuts to higher education student aid programs will negatively impact the quality of our workforce and our economy.
As college tuition and loan debt continue to rise, and student grants-in-aid decline, Congress must take steps to make college more affordable. Please help our nation's students as they work to achieve their dreams of a college degree.
Thank you for your careful consideration of our request.
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