[Congressional Record Volume 141, Number 9 (Tuesday, January 17, 1995)]
[Extensions of Remarks]
[Pages E101-E102]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


   INTRODUCTION OF THE STUDENT LOAN EVALUATION AND STABILIZATION ACT

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                     HON. HOWARD P. ``BUCK'' McKEON

                             of california

                    in the house of representatives

                        Tuesday, January 17, 1995
  Mr. McKEON. Mr. Speaker, I join today with Representative Bill 
Goodling, chairman of the Economic and Educational Opportunities 
Committee, and other members of the committee and with our Democratic 
colleagues in the introduction of the Student Loan Evaluation and 
Stabilization Act. This legislation is urgently needed in order to 
ensure the stability of the Federal student loan program that provide 
access to higher education opportunities for our Nation's students.
  In 1992, when Congress reauthorized the Higher Education Act, 
extensive consideration was given to the concept of a Government direct 
lending program. After long and thoughtful deliberation, the House-
Senate Conference Committee which was dominated by Democratic Members 
from both bodies of Congress, agreed to try a direct lending program 
over a period of several years on a pilot basis consisting of 
approximately 4 percent of new student loan volume.
  One year later, during the budget reconciliation process, the 
complete phase-out of the Federal Family Education Loan Program was 
initiated by the administration in favor of a direct Government lending 
program. The pilot agreed upon during the 1992 reauthorization which 
allowed for a thorough evaluation of the program was no longer 
important. A swift move to a direct Government lending program was 
adopted in order to achieve budget savings. The administration 
continues to promote its direct lending program on the basis of the 
$4.3 billion in savings even though the Congressional Budget Office has 
estimated that approximately one-half of those savings disappear when 
long term administrative costs are included in the cost determination.
  The administration also continues to promote the concept of public/
private partnerships while moving forward with plans to eliminate a 
public/private partnership that has been successful ever since passage 
of the Higher Education Act in 1965. Over the years, Congress has taken 
steps to strengthen this partnership by requiring improved service to 
students while reducing both student and program costs. Before Members 
of Congress are able 
[[Page E102]] to determine which loan program meets the needs of 
students, institutions, and taxpayers, we need a thorough evaluation of 
both programs and the bill we are introducing today allows for such an 
evaluation.
  The bill allows for a much larger pilot than was contemplated under 
the 1992 amendments to the Higher Education Act, but we believe that a 
pilot consisting of 40 percent of new loan volume will permit Congress 
to carefully oversee and evaluate its implementation. At the same time, 
we will be maintaining a stable Federal Family Education Loan Program 
for those institutions not wishing to participate in a Government 
direct lending program. When both programs are fully operational, 
Congress will be able to fairly evaluate the programs for efficiency 
and cost effectiveness prior to making decisions to totally replace one 
program with the other.
  Specifically, this bill provides for the continued implementation of 
the direct loan program at those institutions selected for 
participation in order to achieve 40 percent of new loan volume. It 
calls for increased congressional oversight with respect to the 
expenditure of funds on the part of the Department of Education and a 
revision to budget scoring rules that will correct the existing bias in 
favor of direct lending programs described by Rudolph Penner, former 
Director of the Congressional Budget Office, in his testimony before 
the Budget Committees of the U.S. House of Representatives and U.S. 
Senate on January 10, 1995. We have attempted to ease the application 
process for all students participating in the student aid programs to 
ensure that all students are treated in the same manner. Most 
importantly, we have provided stability to the student loan programs 
which are vital to the continued access to higher education for the 
students of this country.
  In my new role as chairman of the Subcommittee on Postsecondary 
Education, Training and Life-Long Learning, I look forward to working 
with Chairman Goodling and all the members of the subcommittee and full 
committee as we work to reform and improve the education and workplace 
policy programs under our jurisdiction.


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