Video Summary
Bill Statistics
The Middle Class Position
The middle class supports.
How They Voted
58% with middle class
39% against middle class
2% did not vote
Grades
House
The House receives a grade of C for its support of the middle class on this piece of legislation.
253 Representatives voted for the middle-class position; 171 voted against.
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See how each member voted on this bill:
(H.R.3221) On final passage of legislation providing that all new federal student loans be originated directly by the federal government rather than by private lenders issuing federally-guaranteed loans; the bill also authorized a new multi-billion-dollar federal construction program for K-12 schools, and for community colleges, and expanded federal student assistance grants and aid to historically black colleges.
in
- College tuition
- Community college
- Debt & Bankruptcy
- Education
- Job training
- Pell Grants
- Preschool
- Student loans
Introduced:
07.15.2009 [House]
07.15.2009 [House]
Sponsor:
[-]
[-]
2009 House Roll Call #719:
Yea-253, Nay-171
The Legislation:
This was a vote on final passage of H.R. 3221, the Student Aid and Fiscal Responsibility Act of 2009. The bill made a major change in the federal student loan program. It provided that all new federal student loans be originated directly by the federal government rather than by private lenders issuing federally-guaranteed loans. The legislation was designed, in part, to hold down the interest rate on federal education loans, and to make it easier for families to apply for college financial aid. The non-partisan Congressional Budget Office had estimated that shifting new educational lending from a guaranteed third party loan program to a direct loan program would result in budgetary savings.
H.R. 3221, among other things, also significantly increased federal scholarship and grant program and funding for historically black colleges and community colleges. In addition, it included provisions to help veterans attend college under the GI Bill and to give loan forgiveness to members of the military who are called up to duty in the middle of an academic year.
Rep. Hinojosa (D-TX), one of the leading supporters of H.R. 3221, said America’s “competitiveness and innovation in the world depends on our ability to invest in human capital and train a workforce for the 21st century”, and that the bill was designed to help reach the goal of having the U.S. “produce the most college graduates in the world by 2020 and makes our workforce strong and competitive.”
Referring to the provisions changing the student loan program, Hinojosa said the bill “provides low-income and middle class families with reliable, affordable, high-quality direct Federal student loans, and simplifies the application process for financial aid.” He also claimed that the legislation is “fiscally responsible and helps reduce the deficit. It . . . directs $8 billion in savings back to the U.S. Treasury to help pay down the deficit.”
Rep. Kline (R-MN) opposed the bill and argued that the move to a student loan program that only allows for direct federal loans is a “government takeover.” He noted that students already had an option of direct federal loans or federally-guaranteed loans issued by private lenders. Kline argued that the change will put into place “a one-size-fits-all federal loan model that requires the U.S. Treasury to directly lend tens of billions of dollars each year--tens of billions of dollars we don't have, and will be forced to borrow.” Kline argued that the best method would be a “competition” between direct federal lending and federally-guaranteed loans by private lenders and “the best program ought to win in the marketplace.”
Kline also opposed the bill because, he said, it “is awash with new entitlement programs, including a new early childhood program to develop and fund programs at the state level. He claimed that the bill “will cost closer to $15 billion over the next 10 years--and when market risk is factored in, the cost spikes to nearly $50 billion more.”
The vote was 253-171. Two hundred and forty-seven Democrats and six Republicans voted “aye”. One hundred and sixty- seven Republicans and four Democrats voted “nay”. As a result, the House passed and sent on to the Senate legislation providing that all new federal student loans be originated directly by the federal government, and authorizing and extending several major education and school construction programs.
The Middle-Class Position:
The Middle Class Supports. Although a college education is increasingly a prerequisite for a middle-class standard of living, current and aspiring middle-class students and their families are struggling more than ever to afford college. A massive $87 billion subsidy to private companies that make student loans did little to promote affordability. It makes sense for the federal government to eliminate this waste by expanding its Direct Loan program, which is already serving as an effective lender for an increasing number of students as the credit crisis continues to threaten the market for private student loans.
Now the money can be redirected to genuinely help Americans afford college. Approximately $40 billion would increase the maximum Pell Grant, the most widely used college assistance program that helps lower-income students attend college. In recent years, the program has failed to keep pace with the rising cost of college: thirty years ago the maximum Pell Grant covered 77 percent of the cost of attending the average four-year public school, but today it covers only 35 percent. Increasing the maximum award would restore some of this lost purchasing power, providing more students from lower-income families with an opportunity to attend college. The bill’s provision for automatic Pell Grant increases helps ensure that the Pell Grant permanently maintains its value. Caps on interest rates and a reworked fixed interest-rate program will not only make college more affordable for all students, but will make obtaining and keeping a middle-class standard of living easier by reducing the growth of student loan debt, which now averages almost $23,000 for bachelor’s degree recipients, and reducing student loan defaults. An increased debt load can make it difficult for young graduates to make ends meet, much less begin saving or pursue careers in teaching and public service.
Funds for a variety of initiatives to increase access to early-childhood education and graduation rates, to modernize schools, and to improve community colleges will expand the opportunity for students to succeed at all levels of education.
From the Experts:
“This legislation, as well as announcements from the Obama Administration, demonstrates that lawmakers recognize that schools serving predominantly high numbers of low-income students need additional support. We’re very pleased that this bill would introduce unprecedented financial investment in these types of institutions, which ultimately means more support for the students who are least likely to obtain a postsecondary degree. H.R. 3221 represents a large step forward in our efforts to bridge the widening college access gap in our country.”
–Joan H. Crissman, Interim President and CEO, National Association of Student Financial Aid Administrators (July 20, 2009)
“The Student Aid and Fiscal Responsibility Act (H.R.3221) provides an unprecedented opportunity to invest in our economic future from the very beginning. This bill, which ultimately aims to make college accessible to more students, includes an Early Learning Challenge Fund to help increase the number of low-income children in high-quality early learning centers…As we prepare for an unprecedented shortage of highly-skilled workers by the year 2025, we must start making the long-term investments that will help address this looming crisis. The L.A. Area Chamber supports the Student Aid and Fiscal Responsibility Act (H.R.3221) and urges Congress to make the early investments that are needed to create a strong and competitive economy in the future.”
–Los Angeles Area Chamber of Commerce (September 8, 2009)
Beyond this Bill:
The Student Aid and Fiscal Responsibility Act represents an important shift away from a “Heads I Win, Tails You Lose” quagmire. For years, the federal government has allowed private lenders to reap government subsidies while assuming little risk when their loans went bad. The Act changes this by making the government the direct lender for all federally backed student loans. Realigning risk and reward is critical for all sectors of lending, from student loans to the broader financial system.
Further, Congressional Budget Office estimates expose the straw-man arguments of the private lending industry that argued for continued involvement in loan origination. The nonpartisan CBO found that allowing continued private lender participation in origination would cost the federal government an additional $13 billion with no apparent benefit to students.
By cutting unnecessary middlemen out of student lending, the Student Aid and Fiscal Responsibility Act is able to make important investments in education even as the federal government confronts large budget deficits.
