House backs bill to overhaul student loan program
WASHINGTON -- The House voted Thursday in favor of the biggest overhaul of college aid programs since their creation in the 1960s — a bill to oust private lenders from the student loan business and put the government in charge.
The vote was 253-171 in favor of a bill that fulfills nearly all of President Obama's campaign promises for higher education: The measure ends subsidies for private lenders, boosts Pell Grants for needy students and creates a grant program to improve community colleges, among other things. "These are reforms that have been talked about for years, but they're always blocked by special interests and their lobbyists," Obama said Thursday during a rally at the University of Maryland.
"Well, because you voted for change in November, we're going to bring change in the House of Representatives today," the president said.
Ending loan subsidies and turning control over to the government would save taxpayers an estimated $87 billion, according to the Congressional Budget Office. Lawmakers would use that money to help make college more affordable, increasing the maximum Pell Grant by $1,400 to $6,900 over the next decade.
"The choice before us is clear. We can either keep sending these subsidies to banks or we can start sending them directly to students," said the bill's sponsor, California Democratic Rep. George Miller, chairman of the House Education and Labor Committee.
Yet the money also would be spent on things that don't help pay for college, such as construction at K-12 schools and new preschool programs.
And while the measure would increase Pell Grants, it would do nothing to curb college costs, which rise much faster than Pell Grants do.
In addition, the CBO says that when administrative costs and market conditions are considered, the savings from switching to direct government lending could be much lower, $47 billion instead of $87 billion.
Republicans warned that instead of saving the government money, as Democrats promise, the bill could wind up costing the government more money.
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