Education bill goes to House, Senate floors

A long-awaited overhaul of the federal Higher Education Act moved a little closer to completion this week, as House and Senate versions of the bill passed out of committee on their way to floor debates later this year. The two bills contain many similar general provisions, including increases in the maximum awards for Pell Grants, designed for the neediest students, and for Guaranteed Student Loans, which are aimed more at students from middle income families. If a single version of the two bills is passed and then signed by President Bush, funding for both federal grants and loans would be substantially increased for the first time in many years, mollifying years of criticism by colleges and universities across the country. Frank Claus, director of Student Financial Services at the University, said he was "very pleased" with the proposed increases in the limits, calling both "essential" to students who depend on financial aid. Over half of all University students receive some kind of federal financial aid, including grants and loans. "So far we think there are some very good things happening," Claus said. The maximum Pell Grant, currently set at $2400, would rise under the House plan to $4500 in 1994-95, while the Senate bill would increase it to $3600 for 1993-94. Both bills call for annual increases to keep up with inflation after the raise. In the case of federal loans, the current $2625 maximum loan for freshmen and sophomores would be increased to $6500 in the House bill and $3000 in the Senate version. Maximum loans for upperclassmen, which are now $4000, would rise to $8000 in the House and $5000 in the Senate plan. An issue certain to occupy the spotlight during the floor debates is the bills' cost. Both versions call for expanding programs withough cutting eligibility, meaning funding for higher education must be significantly increased to cover the costs. While some members of Congress have argued the cuts in defense spending could provide needed additional funding, others have countered that the plan is too lavish given the "economic reality" of federal deficits and fiscal restraint. Despite similarities, the two bills -- which may be amended during full floor debates later this year and then combined during a House-Senate conference before a final vote in the spring -- are also different in several key areas, most notably in the way student loans are distributed to students. The House bill would eliminate the Stafford loan program in favor of a direct-lending approach. Such a plan would transfer the role of banks and lending agencies, which currently dispense and collect the loans, to the federal government and schools. Senators Paul Simon (D-Ill.) and David Durenberger (R-Minn.), the sponsors of a similar proposal for the Senate bill, decided not to push for a committee vote on the measure this week after a lengthy debate suggested the amendment would be rejected. The amendment could be added to the bill during the floor debate, and David Carle, Simon's press secretary, vowed, "We will take the fight to the Senate floor." Supporters claim the new system would be less cumbersome and could save the government anywhere from $400 million to $2 billion annually, because the process would be more efficient and the government can borrow money at lower rates than commercial banks. They say the savings could be returned to higher education programs, thereby satisfying critics who contend that much of the new legislation is not realistic because of the costs involved. But opponents, which include the Bush Administration and many on both sides of the aisle in Congress, question the claims of possible savings, saying neither the Department of Education nor the schools are equipped with the resources to handle such a large administrative task. Opponents also argue the direct-lending system would not decrease the problem of loan defaults, currently estimated at $3.8 billion, despite suggestions that the Internal Revenue Service replace collection agencies and that payments be built into income tax payments. The banking industry also has been resisting the plan because guaranteed student loans are lucrative for the banks, both due to the large volume of loans and the federal guarantee in the case of default. Deputy Education Secretary David Kearns warned the Senate Committee on Labor Resources on Tuesday that President Bush would veto any bill including a direct loan process. The other source of contention is whether to change Pell Grants from "discretionary" grants to "entitlements," meaning that any student who meets eligibility requirements would be awarded the money. Under the current system, only some eligible students receive the grants. The House bill would phase in Pell Grant entitlements by 1994-95. In the Senate version, the Pell program would not become an entitlement until 1997, in an attempt to keep costs down.

Please note All comments are eligible for publication in The Daily Pennsylvanian.