Statements On Introduced Bills And Joint Resolutions
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - February 13, 2007)
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By Mr. KENNEDY (for himself, Mr. Smith, and Mr. Durbin):
S. 572. A bill to ensure that Federal student loans are delivered as efficiently as possible in order to provide more grant aid to students; to the Committee on Health, Education, Labor, and Pensions.
Mr. KENNEDY. Mr. President, more than 40 years ago, Congress recognized the importance of a college education in opening the door to the American dream. We agreed then that no qualified student should be denied the opportunity to go to college because of the cost. Guided by that principle, we enacted the Higher Education Act of 1965.
Times have changed since then. College education has become even more critical to success in the global economy. Yet, Congress has shamefully lost sight of this fundamental principle, especially in recent years.
Today, 400,000 qualified students a year don't attend a four-year college because they can't afford it. The cost of college has more than tripled over the last twenty years, and vast numbers of families can't keep up. Twenty years ago, the maximum Pell Grant--the lifeline to college for low-income and first-generation students--covered more than half the cost of attendance at a typical four-year public college. Today, it only covers 32 percent.
Yet each year, the federal government wastes billions of taxpayer dollars on subsidies to private lenders to do a job that could be done much more efficiently without these middlemen.
At a time when students and families are pinching pennies more than ever to pay for college, we can't let this situation continue. We should use scarce tax dollars to help students, not banks.
The system we created 40 years ago involved federally-guaranteed student loans made by private lenders, and it's now known as the Federal Family Education Loan Program, or FFEL. At that time, Congress wasn't sure lenders would be willing to loan money to students with no credit history, so we created a system with guarantees against default. Four decades later, student default rates are near an all-time low and private lenders hold over $100 billion in federal student loan volume. Federal guarantees and subsidies have made student loans the second most profitable business for banks, after credit cards. The stock price of the biggest lender, Sallie Mae, has skyrocketed from $3 to more than $40 in the last decade.
In 1994, Congress finally recognized that we could give students a better deal and save billions of dollars by cutting out the middleman. We created the Direct Loan program, in which loans are issued directly to students, from the United States Treasury. The loans are serviced and collected under contracts with private companies, but there is no middleman making the loans.
The Direct Loan program is much less expensive for taxpayers, because it provides loan capital at a lower rate than banks, and avoids billions of dollars in unnecessary subsidies to lenders.
If we had gone to a system of 100 percent Direct Loans in 1994, the government would have saved over $30 billion since the program was created. Unfortunately, because of the lobbying of the private lenders, the FFEL program continues, and the Direct Loan program has never been allowed to compete on a level playing field.
As a result, we continue to waste taxpayer money by paying an unnecessary middleman, we shield lenders from risk, and we continue to guarantee them a very profitable return.
It's time to encourage serious competition in the college loan marketplace, and let students reap the benefits.
Today, Senator GORDON SMITH (R-OR), Congressmen George Miller (D-CA) and Tom Petri (R-WI) and I are proposing a bipartisan plan to do that. Our bill will increase student financial aid by squeezing billions of dollars in corporate welfare out of the student loan program.
Our bill, The Student Aid Reward Act, will provide colleges and universities with grant aid to increase scholarships for their students. It is completely paid for by increased efficiency in delivering student loans. The bill encourages colleges to use the direct loans, which are cheaper for both the government and taxpayers, and allows them to keep half the savings to increase need-based aid. The Congressional Budget Office estimates that our plan will generate $13 billion in savings over the next 10 years from schools switching to the more efficient program. The bill would provide at least $10 billion for additional college scholarship aid at no additional cost to taxpayers.
According to President Bush's 2008 education budget, student loans made through the more expensive FFEL program in 2007 cost $3 more for every $100 in loans than the same loans made directly from the Treasury. Yet, colleges and students have no incentive under current law to use the more efficient program.
Our Student Aid Reward Act encourages colleges to choose the less expensive of the government's student loan programs.
It requires the Secretary of Education to determine every year which loan program is more efficient. Schools are rewarded with additional scholarship funds for using the more efficient of the two programs. Competition will encourage both programs to improve the efficiency of their operations. Schools, students, and taxpayers will all benefit.
Estimates based on the most recent Bush Administration budget indicate that under our plan, each college will receive an incentive payment equal to one and a half percent of the total amount borrowed by students at the college.
In Massachusetts: students at Boston College will receive almost $1.4 million in additional financial aid. Students at UMASS Amherst will receive $1.3 million more. Students at Springfield College will receive over $700,000 more.
Students at Emerson College would receive nearly half a million dollars more.
For students nationwide, college will be more affordable for millions of young men and women at no additional taxpayer cost.
Title IV of the Higher Education Act today is called ``Student Assistance'--not ``Lender Assistance.' The federal student aid system was created to help students and families afford college. But in recent years, it has been corrupted into a system that lines the pockets of the banks. It's time to throw the private money lenders out of the temple of higher education. Scarce Federal education dollars should go to deserving students, not greedy private lenders.
Mr. President, I ask unanimous consent that the text of the Student Aid Reward Act of 2007 be printed in the RECORD.
There being no objection, the text of the bill was ordered to be printed in the RECORD
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By Mr. KENNEDY (for himself, Mr. SMITH, Mr. REED, Ms. SNOWE, Mr. HARKIN, Mr. BINGAMAN, Mrs. CLINTON, Ms. MIKULSKI, Mr. DODD, Mr. DURBIN, Mrs. BOXER, Mr. KERRY, Mrs. FEINSTEIN, Mr. SCHUMER, Mr. LEVIN, Mr. AKAKA, Ms. CANTWELL, and Mr. MENENDEZ):
S. 578. A bill to amend title XIX of the Social Security Act to improve requirements under the Medicaid program for items and services furnished in or through an educational program or setting to children, including children with developmental, physical, or mental health needs, and for other purposes; to the Committee on Finance.
Mr. KENNEDY. Mr. President, it's a privilege to join my Senate and House colleagues in introducing the ``Protecting Children's Health in Schools Act of 2006.' This bill will ensure that the Nation's 7 million school children with disabilities will have continued access to health care in school.
In 1975, the Nation made a commitment to guarantee children with disabilities equal access to education. For these children to learn and thrive in schools, the integration of education with health care is of paramount importance. Coordination with Medicaid makes an immense difference to schools in meeting the needs of these children.
This year, however, the Bush Administration has declared its intent to end Medicaid reimbursements to schools for the support services they need in order to provide medical and health-related services to disabled children. The Administration is saying ``NO' to any further financial help to Medicaid-covered disabled children who need specialized transportation to obtain their health services at school. It is saying ``NO' to any legitimate reimbursement to the school for costs incurred for administrative duties related to Medicaid services.
It's bad enough that Congress and the Administration have not kept the commitment to ``glide-path' funding of IDEA needs in 2004. Now the Administration proposes to deny funding to schools under the Federal program that supports the health needs of disabled children. It makes no sense to make it so difficult for disabled children to achieve in school--both under IDEA and the No Child Left Behind.
At stake is an estimated $3.6 billion in Medicaid funds over the next five years. Such funding is essential to help identify disabled children and connect them to services that can meet their special health and learning needs during the school day.
This decision by the Administration follows years of resisting Medicaid reimbursements to schools that provide these services, without clear guidance on how schools should appropriately seek reimbursement.
The ``Protecting Children's Health in Schools Act' recognizes the importance of schools as a site of delivery of health care. It ensures that children with disabilities can continue to obtain health services during the school day. The bill also provides for clear and consistent guidelines to be established, so that schools can be held accountable and seek appropriate reimbursement.
The legislation has the support of over 60 groups, including parents, teachers, principals, school boards, and health care providers--people who work with children with disabilities every day and know what is needed to facilitate their growth, development, and long-term success.
I urge all of our colleagues to join us in supporting these children across the Nation, by providing the realistic support their schools need in order to meet these basic health care requirements of their students.
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