Our higher education system is facing a crisis. Decades of dramatically increasing costs, in both good economic times and bad, are threatening to push the dream of a college education out of reach for millions of students and families. In fact, according to the College Board’s most recent report on trends in college pricing between 1995 and 2005 the average tuition and fees paid at private four-year colleges and universities rose 36 percent, after adjusting for inflation. Over the same period, average tuition and fees paid at public four-year institutions rose a staggering 51 percent, and at community colleges by 30 percent. This is a national tragedy as the need for a college education is greater than ever, especially considering that our economy is becoming ever more intertwined with high technology and American businesses are facing stiffer and stiffer international competition.

Although President Bush signed this bill into law on September 27, 2007, after long and careful consideration, I concluded that I could not support this bill and voted against it. I believe that the so-called College Cost Reduction Act is actually not the solution to this problem as the bill does nothing to cut or lower the cost of a college education by a single dollar. This bill was touted by my Democrat colleagues as the most significant new aid for college students and their families since the GI bill. But if you examined the provisions of this bill closely, I believe those claims fall completely flat.

For example, H.R. 2669 created several new entitlement programs and much of this new entitlement spending was aimed at colleges, universities and philanthropic organizations, which the Federal government has never done before. As long as the Higher Education Act has existed, student aid dollars have been targeted towards students themselves. Sending money directly to organizations rather than to the students represents a historic departure from the intent of Federal student aid programs; and it is difficult to understand how sending these funds to institutions rather than to the students attending them helps more Americans pay for college. Will universities really have an incentive to reduce tuition rates when they are guaranteed new Federal money? In addition, once Washington, DC creates a new entitlement program, it never ever dies. Taxpayers will be footing the bill for these new entitlements for years to come. In other words, the same students that the bill was supposed to help will eventually have to pay for the phantom savings in higher taxes later.

In addition, H.R. 2669 included a temporary phase down of interest rates over the next 4 years for certain college graduates. In other words, the cut in interest rates would not aid a single college student or high school student planning to go to college; it would benefit those who by definition no longer attend college. Furthermore, just as soon as the rate gets down to half the level it is today it will jump back to its current level. The choice then becomes whether we break the promise this bill made to those former students and allow the rates to rise or break the promise to taxpayers stick them with an additional $20 to $30 billion to pay for those cuts for another 5 years.

Finally, in my opinion, the bill seriously jeopardizes the stability of the Federal Financial Education Loan (FFEL) program by imposing excessive cuts. FFEL program loans are financed by commercial and nonprofit lenders. Commercial lenders include banks, savings and loans, credit unions, and insurance companies. Nonprofit lenders include postsecondary institutions or agencies designated by states. These loans account for approximately 80 percent of the student loan market. Strong competition among FFEL program lenders drives benefits directly to college students and their families, dramatically lowering the cost of their borrowing and providing state-of-the-art services. I fear that the severe cuts to the FFEL program contained in H.R. 2669 will in fact push lenders out of this program, reduce competition, reduce chooses for students and families, and actually drive up college costs.

Posted by Dan Burton (11-14-2007, 11:10 AM) filed under

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