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Thanks to the weather which cancelled many flights, Rep. Tom Petri spent a frustrating Tuesday evening and Wednesday trying to get from Milwaukee to Washington, D.C. The blizzard couldn't have come at a worst time for the Education and Labor Committee member who was scheduled for an important hearing Wednesday evening in support of two amendments he hopes to offer Thursday when the College Opportunity and Affordability Act reaches the House floor for consideration.
The bill, H.R. 4137, is designed to address the soaring price of college and remove other obstacles that make it harder for qualified students to pay for higher education. Before it can come to the floor, the House Rules Committee will meet to determine which amendments it will allow to be offered.
Petri had intended to testify in support of his proposed amendments to study reforms designed to make federal student loan programs more cost-effective and able to deliver loans at lower cost to both students and taxpayers. Instead, he has asked that his written testimony be considered by the committee while he continues to hope flights resume so he can get back to the House in time for Thursday's debate and votes.
Petri argues that taxpayer subsidies provide excess profits for private student loan providers who operate under the Federal Family Education Loan (FFEL) program, also known as the Guaranteed Loan program. He thinks the federal government should consider auctioning the right to offer FFEL loans, thereby using a market mechanism instead of politics to determine how much of a subsidy the government needs to provide lenders in order to get them to participate.
Last year, as a part of the reauthorization of the Higher Education Act, the education committee unanimously adopted Petri's proposal for a study and pilot of his auctions concept. After negotiations with the Senate, however, Petri's amendment was replaced with a more restrictive study proposal championed by Sen. Ted Kennedy (D-MA).
One of his proposed amendments to H.R. 4137 would require the Secretaries of Education and the Treasury, in conjunction with the Government Accountability Office and the Office of Management and Budget, to evaluate the feasibility of market-based reforms as intended by the House education committee's original proposal.
Petri's second amendment would make it easier for policymakers to consider the costs of the FFEL program as compared to the alternative Direct Loan program.
The FFEL program is strongly supported by the private financial institutions which receive subsidies for providing student loans. The Direct Loan program provides the exact same loans, but manages them through the Education Department without what Petri calls "an extra layer of taxpayer supported private bureaucracy under FFEL."
Petri says that those who profit from the FFEL program managed to insert an audit of the Direct Loan program containing a series of reporting requirements designed to make it appear that Direct Loans perform more poorly than FFEL loans.
"This language was clearly designed to undermine the Direct Loan program - boosting the guaranteed loan program's performance in comparison. This language is disingenuous and counterproductive and I believe it must be addressed," Petri said in the testimony submitted to the Rules Committee.
"What's good for the goose is good for the gander," he said. "My amendment would maintain the audit and most of the reporting requirements added to the Direct Loan program, but would also require comparable audits and reporting for guarantee agencies in the Guaranteed Loan [FFEL] program. I have no doubt that the Direct Loan program will nonetheless pass the audit with shining colors and I look forward to the report. I'll be curious if the same can be said of the Guaranteed Loan Program."
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