House committee passes higher ed. bill

The House Committee on Education and the Workforce came to the conclusion of a lengthy debate last week when it passed the reauthorization of the Higher Education Act.

The act sets interest rates on the college and university loans known as guaranteed loans. These are funded by private banks but are subsidized by the federal government.

The committee decided to set interest rates for students with guaranteed loans at 6.93 percent while in school and 7.43 percent after graduation.

David Foy, spokesperson for Rep. Howard McKeon (R-Calif.), who chairs of the Subcommittee on Postsecondary Education, Training, and Lifelong Learning, said the deal drew strong bi-partisan support, passing by a vote of 38-3.

"You're never satisfied with a compromise, but these were the best numbers we could get," Foy said. "This keeps student loan rates as low as they can get. It will help students repay loans while keeping the programs alive."

Bill McCarthy, press secretary for the Committee on Education and the Workforce, said this is the most important bill the committee will pass this term.

"This has been a priority for this committee and this Congress," McCarthy said. "We made this the top legislative priority."

Thomas Butts, associate vice president for government relations, said he is pleased with the conclusion of the committee's work.

"We're pleased that they completed their work," Butts said. "We're looking forward to the Senate."

If Congress does not re-approve the act by July 1, interest rates on some student loans will drop to 6.86 percent, which would make it infeasible for lenders to continue offering the guaranteed loan programs.

But lenders, who worried they would lose profits and be forced to bail out of loan programs, will receive .5 percent more funding if they stay in the industry that will be provided by the federal government.

"The lenders are still not happy with it," Foy said. "They're not jumping up and down with joy, but we believe they will stay."

McCarthy said studies completed by the committee show that these rates will keep the lenders in the program.

"We think that for the most part, they will (continue to give loans)," McCarthy said.

Butts said the lenders probably will continue to give loans with this agreement, but the additional funding for them may be hard to find.

"The big challenge on that front is winning Appropriations (Committee) funding," Butts said.

The Senate Committee on Labor and Human Resources is scheduled to begin debating this issue April 1. Butts said the House committee made the decision to cut loan rates and he hopes the Senate agrees.

"The House decided the students should receive the lowered student interest rates. I hope we won't have to fight that battle again," Butts said.

Improvements on the program can be made in the Senate and in the Senate's conference committee, Butts said. He said the exclusion of funding for the Javits Scholarship for Arts and Humanities was one area the University hopes to see change.

"There may be additional flexibility in student loans," Butts said. "There is possibility of additional improvements in the Senate."

The act will also increase the availability and size of Pell grants, which, Foy said, gives students grants that are not particular to a specific school.

McKeon also proposed a bill that will require the federal government to study and issue reports on the costs of regulation on colleges.

03-24-98