[Congressional Record Volume 140, Number 118 (Friday, August 19, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: August 19, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                 TELLING THE TRUTH ABOUT STUDENT LOANS

                                 ______


                        HON. WILLIAM F. GOODLING

                            of pennsylvania

                    in the house of representatives

                        Friday, August 19, 1994

  Mr. GOODLING. Mr. Speaker, last year during the budget reconciliation 
process, a spirited debate took place on whether to enact a Federal 
Direct Student Loan [FDSL] program under which student loans would be 
made directly by the government rather than through the public/private 
partnership involved in the Federal Family Education Loan [FFEL] 
Program. Many of us continue to have misgivings regarding the enactment 
of the FDSL Program which is being tested at 104 institutions during 
the first year of the program. During this same time period, 95 percent 
of all student loans will continue to be made under the current FFEL 
Program. Many institutions of higher education, parents, and students 
are seeking information regarding the FDSL Program, particularly as to 
how it compares with the FFEL Program.
  In this regard, I was disturbed to see that comments made by 
President Clinton on July 1 at the White House before a group of 
Presidential scholar medallion recipients provide a highly misleading 
picture of the Federal student loan programs. In his remarks, the 
President claimed that ``lower interest rates'' and ``lower fees'' are 
available to borrowers under the FDSL Program. This is simply not the 
case. Federal Direct Stafford and PLUS loans are required to have the 
same terms and conditions as Stafford and PLUS Loans made under the 
FFEL Program, including interest rates and fees. Congress explicitly 
required identical terms and conditions in order to facilitate a 
comparison of the two programs.
  The President also referenced $4.3 billion in savings for taxpayers, 
but did not indicate that this number was the budget estimate for a 5-
year period. Nor did he note that the saving estimate reflected the 
scoring procedure under the Credit Reform Act. As has been documented 
by the Congressional Budget Office, the actual savings, once the full 
administrative costs associated with direct lending are considered, is 
less than half this amount. Even this dramatically lower savings 
estimate assumes that a direct government loan program will operate at 
least as efficiently as the current FFEL Program. Many of us doubt 
whether the government can run any program as efficiently as the 
private sector.
  Student access to higher education is simply too important for 
misleading information to be circulated, particularly by the President 
of the United States. I urge the President to correct the mistaken 
impression that may have been created by his comments. Students and 
parents deserve to know that interest rates and fees are identical for 
Stafford and PLUS Loans in both programs.

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