Defying a veto threat from President Bush, the House of
Representatives on Wednesday approved a bill to cut subsidies to student loan
providers and use the proceeds to reduce interest rates and provide more money
for Pell Grants and minority-serving colleges.
By a 273 to 149 vote, the House
approved the College Cost Reduction Act, which would slash lender subsidies by
$19 billion and redirect most of the savings to other higher education
priorities. “This bill is a remarkable step forward in our efforts to help
every qualified student go to college,” said Rep. George Miller, D-Calif.,
chairman of the Education and Labor Committee.
A similar bill has cleared a Senate
committee and should come up for a floor vote later this month, said Sen.
Edward Kennedy, D-Mass. He called the House vote a victory for students and
families. “The time to put the needs of students ahead of the profits of banks
is long overdue,” he said.
Historically Black colleges and
Hispanic-serving institutions would gain significantly through new funding
guarantees over the next five years, said Rep. Ruben Hinojosa, D-Tex., who
chairs the House subcommittee on higher education.
“It is clear that minority-serving
institutions will only grow in importance,” Hinojosa said. “This historic
initiative will ensure that our nation has enough qualified graduates to fuel
its knowledge-based economy.”
For Pell Grants, the bill would
increase the maximum grant to $5,200 during the next five years. Student loan
interest rates would drop from 6.8 percent to 3.4 percent, which can make
college more affordable for low-income students.
More than 170,000 low-income,
college-qualified students have not enrolled in college because of financial
barriers, Hinojosa said.
Most Republicans voted against the
bill, however, following a White House veto threat this week that may set the
stage for future battles.
In a statement, Education Secretary
Margaret Spellings strongly criticized the bill for failing to do enough for
low-income students.
“The federal government’s role has
always been to help those students most in need. Unfortunately, the House bill
fails to meet that responsibility.”
Spellings criticized the bill for
focusing most of its benefits on those already out of school – the main
beneficiaries of a short-term cut in interest rates.
The bill devotes only 38 percent of
its savings to low-income students, with only $5.8 billion dedicated to
increase Pell Grants, the secretary said. By comparison, President Bush would
commit nearly $20 billion in funding to support an expanded Pell Grant.
Despite the threat, Spellings
signaled a willingness to work with Congress “to address these issues in a way
that best meets the needs of America’s
students.”
Other
provisions of the bill will
Expand tuition aid to
undergraduates who pledge to teach in public schools;
Provide loan
forgiveness for students entering public service professions; and
Increase federal loan
limits for undergraduates so they may not need costlier private sector loans, a
sector of the lending industry that has come under criticism this year.
‘Best & Brightest’
A similar bill has cleared a Senate committee and should
come up for a floor vote later this month, said Sen. Edward Kennedy, D-Mass. He
called the House vote a victory for students and families. “The time to put the
needs of students ahead of the profits of banks is long overdue,” he said.
– Charles Dervarics
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