Higher education leaders are apoplectic about a proposal by the Senate education committee to use savings from the student loan programs to help businesses, hospitals and schools recovery from Hurricane Katrina.

In its rush to draft and pass a bill to renew the Higher Education Act last week, the Senate Committee on Health, Education, Labor and Pensions acted without waiting, as federal lawmakers usually do, for the Congressional Budget Office to review the legislation to say exactly how much it will cost or save.

At the time the bill was passed, the committee estimated that it had saved at least $12.5 billion – through a series of cuts in subsidies to lenders and some increased fees and interest rates for student loans – that it would use to create two new grant programs for low-income students and to put toward Congress’s effort to shrink the budget deficit.

Late last week, however, the committee’s chairman, Sen. Michael B. Enzi (R-Wyo.), and its top Democrat, Sen. Edward M. Kennedy (D-Mass.), issued a news release saying that preliminary estimates of the Higher Ed Act bill would produce savings over and above the $12.5 billion the committee said it had cut, and that the panel hoped to use those funds to pay for the health care, labor, education and other needs under its jurisdiction.

“America is facing an epic tragedy unlike anything living generations have ever seen,” Enzi said in the news release. “Countless schools, hospitals and jobs have been washed away by this disaster. We can and should use a portion of the savings identified by CBO to assist communities and families and help them speed the rebuilding of their lives.” 

College lobbyists say they first learned of the senators’ idea of putting any extra savings from the loan programs toward post-Katrina restoration at a meeting Tuesday with Senate staff members, at which various college groups put forward their “wish lists” for steps Congress might take in planned legislation to deal with the Katrina aftermath. (Among the colleges’ requests were additional work study and other aid for students at institutions that have closed, infrastructure and "lost revenue" funds for colleges damaged by the storm, money for colleges playing host to evacuated students for whom they have waived tuition, and broad regulatory flexibility.)

At that meeting, according to officials of several higher education associations, Senate aides said that some money for colleges and students affected by Katrina might come from special appropriations that Congress might provide for general Katrina relief, but that some might come from savings from the loan programs. Late Tuesday, one college lobbyist stumbled upon the committee’s news release and quickly sent it around to colleagues, drawing angry reactions.

“No other group affected by this disaster would have to self-finance their own disaster relief,” said Cynthia J. Littlefield, director of federal relations for the Association of Jesuit Colleges and Universities. “Yet that’s exactly what we would be asking our students to do.”

“The Senate is asking struggling students across the country to be the rainy day fund for the federal government.,” the State PIRG’s Higher Education Project said in a news release. “Instead of addressing the struggle faced by students and their families to pay for a college education, Congress is trying to balance the federal budget on their backs.”

In their responses, college and student lobbyists walked a careful line, not wanting to appear insensitive to the plight of displaced workers, kindergarteners and others affected by Katrina.

Craig Orfield, a spokesman for the Senate education committee, said on Wednesday that it was premature to know exactly whether the panel would have money to set aside for Katrina-related relief until the Congressional Budget Office provided a “final firm estimate” of the bill’s savings. (A spokeswoman for Kennedy said she could not comment until her office saw a final CBO “score.”)

But Orfield said Enzi and Kennedy did believe it was appropriate to use savings from the loan programs to help with the hurricane disaster, and he expressed surprise, and couldn’t hide some dismay, that college lobbyists were reacting so negatively to the idea.

“Maybe some of these folks don’t realize just what’s happening down there,” he said of the areas ravaged by Katrina. “We have to help put kids back in school, and help college students, too. It sounds like some of these folks don’t realize how significant the education needs are in the wake of Katrina.”

College leaders say that’s not so. What they object to, they say, is that the federal government seems intent on finding new funds to pay for all of the Katrina-related needs – except for those connected to higher education, just because the Higher Education Act legislation “happens to still be in their inbox at the same time,” as one lobbyist put it.

"It's a pretty ambiguous and fluid situation," said Terry W. Hartle, senior vice president for government and public affairs at the American Council on Education. "I hope the Senate doesn’t want to cut student loans to pay for hurricane relief."

In an interview Wednesday, the head of the House of Representatives higher education committee, Rep. Howard P. (Buck) McKeon, said that while the Higher Education Act bill his committee drafted in July directed all of its student loan savings toward budget reduction, he did not favor the Senate panel’s idea of putting any additional savings toward Katrina efforts.

“I don’t think that given the problems we already have in higher education that that’s where we should go to turn for help” with Katrina, McKeon said. Any additional funds squeezed from the Higher Ed Act legislation, he said, should be plowed back into helping students.

Also on Wednesday, the U.S. secretaries of labor and education held a news conference in which they outlined the steps their departments are taking to help those affected by Katrina. Elaine L. Chao, the labor secretary, announced that her department was providing $12 million in new grants to help workers in Alabama, Lousiana, Mississippi and Texas get short-term job training or pursue industry-recognized certificates, licenses or other credentials at community colleges in the region.