Washington, DC – Congressman Brett Guthrie (KY-02) participated in a press conference Tuesday, March 16, 2010, with Rep. John Kline (R-MN), Education and Labor Committee senior Republican and Sen. Lamar Alexander (R-TN) to discuss the proposed inclusion of a government takeover of student loans in the pending health care reconciliation package.
During the press conference, Congressman Guthrie and his colleagues argued such a move is an abuse of the legislative process that will eliminate borrower choice and competition, destroy tens of thousands of jobs, and add to the country’s long-term debt.
During the press conference, Congressman Guthrie made the following remarks:
“When I talk to people back home, a lot of the biggest concerns that you hear from people is the cost of college and being able to afford to send their kids to college.
“And a lot of these are middle class incomes where people can’t get the Pell grants and have to borrow money for their kids to go to college.
“And if you think about the lender subsidies and the savings that the federal treasury comes from, you hear a lot about lender subsidies, under the FFEL program the federal government establishes the interest rate paid by students. The government also establishes a market-based rate of return for lenders – they can never earn more than this amount, and when they do, they pay the extra back to the federal government.
“In today’s low interest rate environment, the federal government is actually earning money from FFEL lenders. Even under the emergency legislation enacted last year, the government is making a profit.
“What our colleagues on the other side of the aisle have discovered is that the federal government can earn even more money through the Direct Loan program, this is what Senator Alexander was talking about, where students pay interest and fees to the government directly.
“The federal government has a lower cost of borrowing than private industries do. And because the Treasury borrows at a lower rate, with full faith and credit, they borrow at a lower rate, but they are still charging the students the same interest rate.
“So as the federal government lowers it costs of borrowing, we don’t pass that onto the students. We are taking that money, so students paying back their loans are financing all the programs in this bill, like the Pell grants that Senator Alexander talked about.
“They are financing the community college programs which all of us agree on, but we don’t think it should be on the backs of people paying back their loans or struggling to pay back their loans. Another thing they actually take money from them and move it into the elementary and secondary education programs.
“So we are actually transferring student aid money into other programs, and we think that is unacceptable for those that are struggling to try and pay back their student loans.”
To watch a video of the congressman’s remarks, please visit:
http://www.youtube.com/watch?v=NRUtNgGUSAY
Document: Ten Things Every American Should Know About the Government Takeover of Student Loans
http://republicans.edlabor.house.gov/PRArticle.aspx?NewsID=1474&IID=5
Congressman Guthrie discusses the proposed inclusion of a government takeover of student loans in the pending health care reconciliation package at a press conference on Tuesday, March 16, 2010.
