[Congressional Record Volume 141, Number 163 (Friday, October 20, 1995)]
[Extensions of Remarks]
[Pages E1995-E1996]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                STUDENT LOAN PROPOSAL HURTS MIDDLE CLASS

                                 ______


                            HON. TIM ROEMER

                               of indiana

                    in the house of representatives

                       Thursday, October 19, 1995

  Mr. ROEMER. Mr. Speaker, last month the education committees of both 
bodies of Congress reported their respective versions of the budget 
reconciliation bill. Unfortunately, these proposals would harm our 
investment in education. Although the proposals are slightly different, 
their impact is the same: They will raise the cost of college and 
ultimately deny access to higher education to thousands of American 
families.
  Instead of making a college education more accessible and affordable, 
the budget reconciliation proposals would cut more than $10 billion 
from student loans over the next 7 years. One proposed change to the 
student loan program is a new tax on colleges and universities based on 
the volume of guaranteed loans used by their students. Twenty million 
students enrolled at more than 7,000 schools would be adversely 
affected by this proposal each year.
  The proposed student loan tax would force schools to increase tuition 
or cut back in other services to pay for this fee. Such a tax not only 
penalizes students, but also unfairly impacts schools that admit 
students who need financial assistance. College students and their 
families now have more debt than ever before, and it has become 
increasingly difficult for students and their families to afford 
college. For many middle-income families college soon will be out of 
reach financially.
  I strongly oppose the proposed changes and other savings taken from 
the Student Loan Program which would increase the tax burden of the 
middle class. As written, the student loan changes represent yet 
another slap at middle-class working Americans who must rely on Federal 
student loan programs to help finance their children's college 
education.
  For the benefit of my colleagues, I am inserting in the Record an 
editorial written by the president of the University of Notre Dame, 
Rev. Edward A. Malloy, which appeared recently in the Chicago Tribune. 
Rev. Malloy 

[[Page E1996]]
points out that taxing higher education is indeed shortsighted. Such 
action by Congress will make the American dream of a college education 
for middle-class families nothing more than a mirage that is completely 
out of reach for most families.

                [From the Chicago Tribune, Oct. 3, 1995]

       Financial Burden--Taxing Higher Education Is Shortsighted

                         (By Edward A. Malloy)

       Hidden away in recent news stories was a report that the 
     Senate's Labor and Human Resources Committee proposes to tax 
     colleges and universities based on the total volume of 
     guaranteed loans used by their students. If such a tax were 
     enacted, many institutions would face yearly assessments 
     running into hundreds of thousands, perhaps millions, of 
     dollars. Not only would colleges and universities be burdened 
     with yet another federally mandated fee, but we would most 
     certainly be required to meet increased federal budget 
     regulation for the ``loan tax'' program. Such an effort by 
     the committee flies in the face of congressional rhetoric 
     championing decreased taxation and less federal intervention 
     in state and private matters.
       Federal student loan programs exist to help students and 
     their families afford college educations. Beyond a doubt, 
     post-secondary education is the most significant factor in 
     determining future income. Anything which increases the cost 
     to students, particularly to those middle- and lower-income 
     students who depend on student loans, will have a significant 
     impact on their ability to start, or complete, college 
     programs.
       Students already are assessed a fee directly on their 
     federal student loans. An additional fee on institutions of 
     higher education, as proposed by the Senate could have 
     several possible impacts on students--all of them harmful. 
     Many schools simply will pass the fee along in the form of 
     higher tuition. Others will handle the fee by reducing 
     allocations for other priorities, such as undergraduate 
     teaching, financial aid or student services. Students will 
     pay, in fact, they will pay twice--once directly, once 
     indirectly.
       The impact of this double tax not only places a financial 
     burden on students, but also in the long run promises to 
     restrict access to higher education and to leave more young 
     people behind as our society enters an increasingly 
     information-based and technology-dependent age.
       In developing this fee scheme, the Senate attacks precisely 
     the people it purports to represent, middle-class families 
     who see higher education as the best means of achieving the 
     American dream. In a Congress which is reducing spending for 
     education, particularly higher education, the Labor and Human 
     Resources proposal adds insult to injury by both making loans 
     more expensive and at the same time reducing their buying 
     power. In the end, the student loan fee is nothing more than 
     a tax increase on the middle class, the proceeds of which 
     will find a tax cut for the wealthy.
       We know as well that once the federal government begins 
     assessing fees it rarely reduces or eliminates them. In fact, 
     over time the fee most likely will increase. We also will 
     inevitably get more regulatory requirements with the fee. Our 
     institutions already strain under the weight of enormous 
     reporting requirements for programs like the Federal Family 
     Education Loan program. We spend hundreds of man-hours and 
     significant resources meeting federal requirements. Adding a 
     fee structure to this process will only increase this burden. 
     This type of overregulation forces institutions like my own 
     to seriously consider alternatives to the existing federal 
     programs.
       The committee is seeking an easy way to meet its budget 
     obligations by imposing a tax on the nation's higher 
     education system. Such a tactic is more than simply 
     misguided, it is wrong, Higher education, including students 
     and parents, already has been targeted for more than our fair 
     share of budget cuts. We face reduced funding for basic 
     research, for the humanities and the arts, a proposed 
     reduction in the interest subsidy for student loans, 
     elimination of the federal portion of Perkins Loans as well 
     as State Student Incentive Grants and consistent underfunding 
     of the Pell Grant program.
       I believe I can speak with confidence when I say all of 
     higher education would oppose an institutional fee on student 
     loans. The government simply should not be taxing 
     universities to pay for unwanted B-2 bombers and submarines.
       Higher education is one of our nation's most successful 
     enterprises and most valuable commodities. Why would Congress 
     seek to undermine it by placing it out of reach for more and 
     more families? To do so would be egregiously shortsighted. 
     American needs the richness and diversity of its system of 
     education. We must demand that Congress treat higher 
     education as the national resource and national treasure it 
     is, and not as some untapped ``revenue stream'' to subsidize 
     other federal spending.

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