House Takes Up Student-Loan Bill, With Passage Expected on Thursday

September 16, 2009

The U.S. House of Representatives began debate Wednesday on a bill (HR 3221) to end bank-based student lending, adopting an amendment that would provide $50-million to help colleges make the transition to the government's direct-loan program

Lawmakers are expected to pass the bill on Thursday after considering several additional amendments, including one that would preserve a role for private lenders in originating and servicing loans, rather than switch to 100-percent direct lending. That amendment, to be offered by Rep. John Kline of Minnesota, the top Republican on the education committee, is unlikely to be approved.

During the first day of debate on the measure, lawmakers adopted an amendment by Rep. George Miller of California, chairman of the education committee and the bill's sponsor, that would give the Education Department $50-million to provide technical support and training to the roughly 70 percent of colleges that remain in the bank-based guaranteed-student-loan program. The amendment would also bar states from overseeing private colleges that receive grants through a $2.5-billion College Access and Completion Fund that the bill would create. In addition, Mr. Miller's amendment would allow part-time students who attend college year-round to receive two Pell Grants in a single academic year.

The ban on state oversight was sought by private-college officials, who had feared that state governments, which would be responsible for distributing the access-and-completion grants, would try to control the colleges' curricula or force them to participate in student-tracking systems.

Lobbyists for public and private colleges have asked Congress to award the grants to colleges directly, arguing that it would be more efficient than passing the money through the states. The House has not agreed.

Senate Action Next

Mr. Miller's change in Pell Grants was requested by community colleges and financial-aid administrators, who say that rules issued last month requiring students to complete all of the credit hours in a college's academic year before receiving a second Pell Grant will make it nearly impossible for part-time students to take advantage of year-round Pell Grants.

Lawmakers also adopted a pair of amendments related specifically to community colleges. The first would allow those that received construction aid under recent economic-stimulus legislation to receive money for that purpose under the student-loan bill. The second would require the secretary of education to give top priority to community colleges in areas with high unemployment when awarding grants for community-college reform. Votes on three Republican amendments are pending.

If the student-loan bill passes on Thursday, as expected, action will shift to the Senate, which has yet to offer its version of the bill.

On Tuesday, Mr. Miller told reporters that the Senate education committee could take up its bill as early as September 30, although that timing will depend in part on the status of that chamber's health-care debate.

If the student-loan bill clears the Senate, it would go to President Obama for his signature. Mr. Obama, who proposed ending guaranteed lending in his budget for the 2010 fiscal year, issued a statement this week supporting the House bill.