With the U.S. House of Representatives scheduled to vote next week on legislation to end the guaranteed-student-loan program and expand aid to students and colleges, opponents and supporters of the bill continue to bicker over its potential cost and savings.
On Thursday, Congressional Republicans released an analysis that found that the Democratic bill (HR 3221), which would tie the maximum Pell Grant to the Consumer Price Index and broaden eligibility for the awards, would cost taxpayers billions of dollars more than budget analysts originally thought.
The Congressional Budget Office analysis, which was requested by the top Republican on the House education committee, found that expanding Pell Grants would cost taxpayers $11-billion more over ten years than the office had estimated in July. The analysis blames the increase on rising participation in the Pell Grant program and an increase in the forecasted rate of the CPI.
Republicans opposed to the bill argue the new numbers, coupled with other revised estimates of the measure’s cost and savings, show that the Democrats’ plan would spend billions of dollars more than it would save.
“Democrats are saving less, spending more, and rushing to enact a plan that will eliminate choice and competition for students while burdening taxpayers with billions in new spending,” said Rep. John P. Kline Jr., Republican of Minnesota, the congressman who requested the report.
But Democrats accuse Republicans of resorting to budgetary gimmicks and note that the original estimate, not the revised one, counts as the bill’s official cost estimate, or “score.” The score is important because the bill must comply with Congressional “pay as you go” rules that require new spending to be offset by cuts.
“No one is fooled by their tired tricks,” said Rachel Racusen, a spokeswoman for the chairman of the House education committee, Rep. George Miller, Democrat of California. “The truth is, this cherry-picked analysis has absolutely no impact on this historic bill.”
Diminishing Savings Estimates
Thursday’s report comes roughly two weeks after another government agency, the Office of Management and Budget, said the cost of expanding the Pell program would be $27-billion more than the administration had estimated in February, and a month and a half after the Congressional Budget Office released another analysis showing that ending guaranteed lending would save $33-billion less than previously projected if student-loan default rates rise sharply. That analysis was requested by a top Republican on the Senate education committee.
Meanwhile, both sides are gearing up for the imminent release of the Congressional Budget Office’s analysis of a counterproposal to the legislation that was crafted by student-loan groups. If the long-awaited analysis shows that their plan, which would preserve a significant role for private and nonprofit lenders and guarantors in the federal student-loan system, would save as much money as the Democratic proposal, it could create momentum for the industry alternative. If the analysis doesn’t show that, it could deal a blow to the counterproposal.
In the past, lenders have said they expect their plan to generate at least as much savings as the House bill. But a Congressional aide says the savings in the lenders’ plan will be closer to $70-billion, $17-billion less than the original budget-office estimate for the Democratic plan.
The budget office may also release a separate score showing that the counterproposal’s savings would increase if lender fees were counted as discretionary, rather than mandatory, spending. Discretionary spending is provided through the annual appropriations process, while mandatory spending is automatic.
