NEWS

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November 4, 2005

Congress to trim student aid by $15 million

WASHINGTON, D.C.—The House education committee voted last Wednesday (October 26) to trim federal spending on higher education by $15 billion, drawing criticism from education groups that it would be the largest cut ever to higher education funding.

The “Plan for Fiscal Responsibility,” written by House Education and the Workforce Committee Chair John A. Boehner, (R-OH), would restructure student loan programs and remove large subsidies to lending firms.

The proposal to reduce education spending is part of the $50 billion federal budget reconciliation.

Advocates of the plan say it reduces wasteful spending while allowing more flexibility for students.

But Democrats and education watchdog groups said the cuts could translate to thousands of dollars of increased costs for college students.

“This is the plan to balance the budget on the back of college students,” said Chris L. Lindstrom, director of the Higher Education Project for the State Public Interest Research Groups.

Students have increasingly borrowed money to finance their college educations. According to Lindstrom, the volume of college loans has increased 60 percent since 1998.

The proposal is an update of a bill introduced earlier this year to reduce spending by $8.7 billion. That reduction would have added as much as $5,800 of debt to the average college student’s debt, which is currently about $17,500, Lindstrom said.

“It’s too early to tell how much more debt an extra $6 billion reduction would add to student debt,” Lindstrom added.

House education committee spokeswoman Alexa E. Marrero defended the proposed reductions and made clear that they are not cuts to programs that directly affect students. “The $5,800 is based on an inaccurate representation of what these policies are,” she said.

Last year, the federal government provided $70 billion in direct aid to students, Democratic congressman, and about 200 college-age students rallied at the Capitol Tuesday (November 1) against the proposal, which they call a “Raid on Student Aid.”

Representative George Miller (D-CA), the senior Democrat on the House education committee, said students across America needed to take action. “You need to stop downloading the music for 20 minutes and start downloading the congressmen,” he said.

The deeper cuts come as the Bush administration—saddled with the costs of Hurricane Katrina relief efforts and the war in Iraq—looks to trim the federal budget.

President George W. Bush, speaking last Wednesday (October 26) to the Economic Club of Washington, said his administration was looking at ways to trim the budget “so we can provide for emergency relief in a fiscally responsible way.”

Bush said emergency relief spending would not defeat efforts to reign in federal deficit spending.

“We can help the people of the Gulf Coast region recover and rebuild, and we can be good stewards of the taxpayers’ dollars at the same time,” Bush said. “In Washington, there’s a lot of programs that simply don’t deliver results. And if it doesn’t deliver results, we ought to get rid of them.”

Bush said he was working with congressional leaders to reduce mandatory and discretionary spending, calling his budget the “most disciplined proposal for non-security discretionary spending since Ronald Reagan was in the White House.”

The committee proposal to reduce education spending would make the administrative money for several student aid programs—including Pell Grants and Direct Loan—subject to annual approval by Congress. Currently, the loan program is an entitlement for borrowers, meaning the amount of administrative money needed could fluctuate.

“This change is incredibly risky,” said Luke Swarthout, a spokesman for State PIRG, adding that the money must be made available to administer loans. “It’s like gambling with your rent money.”

Marrero said the change is appropriate and would give Congress more oversight.

Democrats have criticized the education cuts. Senator Barack Obama (D-IL), speaking two weeks ago about the $8.7 billion plan, said he supported cutting subsidies to banks, but that the money saved should be reinvested in higher education.

“The rationale for these cuts is that they are needed to fund cuts to pay for Katrina relief,” Obama said. “What is happening right now is Republicans are saying, ‘To pay for Katrina, we have to do across-the-board cuts.’”

The $15 billion reduction plan will now go to the House Budget Committee.