Political Maneuvering on Student Loans

On eve of vote to cut interest rate, a role reversal: Republicans critique and Democrats defend bill.
January 17, 2007

With the 110th Congress preparing to vote today on its first significant piece of higher education legislation, Washington crackled Tuesday with vintage, and in some ways predictable, politicking. But much of it had a through-the-looking-glass feel to it.

First, you had Democrats in the House of Representatives scrambling to explain away a perceived flaw in their proposal to halve the interest rate on federally subsidized loans for undergraduate borrowers within five years.

As critics (read: lenders) noted that the legislation ( H.R. 5), as written, would let the interest rate zoom back up to the current 6.8 percent in January 2012, after just six months at the low of 3.4 percent, Democratic staffers explained that budget rules and fiscal realities required that compromise. They also said they fully expected to find money in the intervening years to make the cut permanent.

Student-aid lobbyists generally gave them the benefit of the doubt, though some said they had been misled, or at least underinformed, about the legislation’s particulars.

As the Democrats struggled with the newly rediscovered challenges of governing, Republicans found themselves in the equally unaccustomed role of loyal opposition.

Rep. Howard P. (Buck) McKeon (R-Calif.), now the senior Republican on the House Education and Labor Committee, complained about the Democrats’ plan to bring the student loan bill to the House floor without first seeking the approval of the education panel, which McKeon headed just 30 days ago but on which he is now second fiddle. McKeon described the legislation as “well-intentioned” but “badly flawed.”

He said he hoped Rep. George Miller (D-Calif.), who is running the committee now that Democrats control the House, would see fit to amend the bill with legislation that McKeon introduced Tuesday, which would put in place many of the disclosure requirements and other measures aimed at controlling college prices that Republicans tried to incorporate into a measure to extend the Higher Education Act that passed the House last year but ultimately stalled.

But in virtually the same breath, McKeon acknowledged that no such amendment would be possible, because Democrats, eager to notch an early victory in their vaunted “first 100 hours” agenda, have structured the rules for for today’s vote in a way that bars changes to the legislation.

In a letter to Miller, McKeon derided the “closed process through which the bill has been sent to the floor,” which he said would make cooperation between the parties not “merely difficult, but impossible.”

His cries of the unfairness of that legislative tactic – “This is quite a departure from the way our panel has brought higher education proposals to the floor in years past, and I am hopeful the trend does not continue in the weeks and months to come” -- struck some observers of Tuesday’s goings-on as ironic, given the frequency with which Republicans engaged in similar antics during their 12 years in charge of Congress.

A comparable reaction greeted the White House’s announcement Tuesday that the Bush administration, too, would oppose the student loan legislation because it is misdirected to help college graduates (borrowers of subsidized loans don’t pay interest while they are in college) who have “higher lifetime earnings” who don’t need more aid as much as “students and their families who are struggling to meet current and future educational expenses.”

Instead of encouraging more borrowing by lowering interest rates, the White House said in its Statement of Administration Policy, “the Administration would support efforts to direct savings to additional grant support for low-income students.”

It was difficult Tuesday to find a higher education lobbyist who did not note with irony that this White House, working with the Republican-led Congress, had failed to increase spending on the Pell Grant, the primary aid program for low-income students, for the last five years, which is seemingly about to become six.  

All of Tuesday’s maneuvering aside, the student loan legislation is expected to pass the House handily. The only real question is how many Republicans will join the unified Democrats in approving the bill.


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