Maryland Democratic Reps. Steny Hoyer and Ben Cardin denounced the change to the Higher Education Act that would cut nearly $15 million in funding to banks that disburse federal student loans in a panel discussion yesterday in Stamp Student Union.
They pledged to vote against the bill when it appears before the U.S. House of Representatives this month after the Committee on Education and the Workforce voted to approve it last Wednesday. The bill would increase first-year, second-year and graduate student borrowing limits for federal student loans. If passed, the bill would allow students to borrow anywhere from $1,000 to $2,000 more than they can under the current Higher Education Act provisions.
Many Democrats, as well as university officials and student lobbying organizations, have spoken out against the measure because they feel the bill inappropriately diverts funds from student aid.
“We do not want students burdened,” said Barry Toiv, a spokesman for the Association of American Universities, which lobbies on behalf of student issues. “We also believe any reductions made in student aid programs should be funneled back into student aid programs.”
About 40 students, including many Student Government Association legislators and student senators, attended the panel, where SGA President Andrew Rose introduced the speakers.
Hoyer described the process as “disinvesting” in the country’s future and sullying the progressive legacy of federal initiatives such as the G.I. Bill, which paid for thousands of returning soldiers to pursue degrees after World War II.
“We are passing at the federal level one of the most irrational fiscal policies in the history of America,” he said. “We are putting your generation deeply into debt.”
Cardin said the bill endangers thousands of students’ ability to access higher education and enter their chosen professions.
“This is a great university, but you need to have students who can go here,” he said. “Too many people today are entering professions that are not their first choice because they need a paycheck to pay their student loans.”
Opposition to the bill appears to fall along party lines. Many Republicans support the measure because it aids the overarching government goal of “budget reconciliation,” which seeks to earmark funding to pay down the national deficit, lower taxes and provide help for victims of hurricanes Katrina and Rita. Supporters also say it will reduce students’ debt in the long run by lowering taxes — the primary source of funding for payments to banks and companies that distribute student loans.
“We’re keeping in mind that students are also taxpayers and it’s in their interest to pay down the federal deficit,” said Alexa Marrero, a spokeswoman for the Committee on Education and the Workforce.
The government extends two main categories of student loans — direct loans, where students borrow directly from the government, and Federal Family Education Loans, where students borrow from banks or private companies. Each university chooses which type it accepts. This university subscribes to FFEL loans and encourages students to choose from one of eight lenders — including Citibank, Bank of America and Wachovia — according to the university’s online application guide.
The government grants money to lenders in the form of subsidies. Many on both sides of the issue said the government gives banks too much money, and that the system needs to be made more efficient because subsidies exceed the money banks spend processing and distributing student loans.
“We have been urging [Congress] to bring down subsidies to banks,” Hoyer said.
Where the money should go is where bill supporters and detractors differ: Those who oppose the bill say the money should be recycled back into student aid programs while those who back the bill support the money going to reduce taxes, help hurricane victims and pay down the federal deficit.
But one part of the bill many people agree on is that the increase in the amount students can borrow will help make college more accessible to low-income students.
“We think the current limits are unrealistic given the costs facing students and families,” Toiv said. “We’re pleased that there is an increase.”
However, he said, increased loan limits mean that students may graduate with more debt, which is not ideal, but beats the alternatives.
“[Students] are going to use credit cards, which have higher interest rates [than federal loans] or they’re going to work such long hours that it will compromise their educations,” he said, adding that an increase in funding to federal grants — which students do not repay — would be the ideal solution.
Both representatives said students need to voice their opinions to those in Congress.
“We need to get you to stand up and holler,” Hoyer said.
