Democratic House Passes College Cost Reduction Act

motivez · 07-11-2007, 07:03 PM

The House has passed the College Cost Reduction Act of 2007, H.R. 2669, by a vote of 273-149. The bill will provide the single largest increase in college aid since the GI bill in 1944. The legislation invests about $18 billion dollars over the next five years in reducing college costs, helping millions of students and families. It comes at no new cost to taxpayers, and is funded by cutting excess subsidies paid by the federal government to lenders in the student loan industry.

This chart from the Education & Labor Committee shows the increase in the maximum Pell Grant award provided in the bill by the Democratic-led Congress

Education and Labor Committee Chairman George Miller spoke out against a Republican effort to kill the bill through a motion to recommit at the end of debate:

YouTube Video

Chairman Miller:
“You could have written a motion another way, you deliberately wrote it this way so you could kill this bill. What is it you don’t like about this bill? You don’t like the fact that while you were in power after years of flat lining the Pell Grant, we we’ve finally given them the biggest increase in decades for the poorest kids in this country. You don’t like that so you want to kill the bill. You don’t like the fact that were going to take 5 million middle class kids and extend to them a loan thats interest rate is cut in half? While their families are struggling to get them through college? They’re making sacrifices every year? You’re going to do this? You’re going to kill this bill? Are you proud? Are you proud of this amendment, that you are going to try to kill this bill? Say it louder.”

I was going to include the actual text of the bill but it woulda made my post like 15 pages long, so click the link up top instead.

Anyway, one less thing people can say the Democrats haven't gotten accomplished. If Bush vetoes it and they don't have enough votes to override, they can't really be faulted for this.

I don't really see a problem in paying for this by cutting subsidies for lenders, they make a profit on what they do already, there's really no reason I see to pay them to run a profitable business..

I also think it's good that more people will have a chance to go to college, tuition is ridiculously expensive, even if worth it because of the earning potential of a graduate.

tbone · 07-11-2007, 08:27 PM

Wow, never even heard of this. Good post!

DosEquis · 07-11-2007, 08:53 PM

Thanks for posting this. It just illustrates what I was trying to say in the other thread, about how the legislation they are passing is being over shadowed by Iraq and investigations. Ironically those other issues are taking such a dominate place in politics because the administration has screwed them up, and then people are mad at democrats for the media and democrats spending the majority of their time covering it.

SpicyMcVoodoo · 07-11-2007, 10:10 PM

Who are the farm animals in the background causing all the ruckus? It would be really interesting to find out who voted against this bill, and then trace how much money they get from the loan industry.

thomez · 07-12-2007, 01:02 AM

They lowered the allowed interest rates from private lenders, probably dropping them to levels that are simply not profitable for a bank to handle - but have no fear, the government will still loan you money! and they don't care how much of our money they lose to defaults and bankruptcy!

did anyone else watch the debate on this issue today on CSPAN?

SpicyMcVoodoo · 07-12-2007, 01:13 AM

Originally Posted by thomez

and they don't care how much of our money they lose to defaults and bankruptcy!

It's extremely difficult to discharge federal student loans in bankruptcy.

thomez · 07-12-2007, 01:17 AM

Originally Posted by SpicyMcVoodoo

It's extremely difficult to discharge federal student loans in bankruptcy.

It's extremely easy to lose money trying to collect on those loans when you are lending it out at well below prime rates to start with.

WickedLou9 · 07-13-2007, 09:37 AM

Originally Posted by thomez

It's extremely easy to lose money trying to collect on those loans when you are lending it out at well below prime rates to start with.

The point is not to make a profit. The point is to make sure that these kids can go to college and become productive adults. it's not a profit making endevor, it's an expense, but it's one that will hopefully pay dividends in the future.

Stylerod · 07-13-2007, 10:40 AM

I hadn't heard about this bill either. it sounded great after Mots post. But Thomez, are you saying the government demanding the interest is so low that private lenders will be unable to get back their costs from it or turn a profit? So what happens when those lenders decide to not offer loans anymore? Aren't we right back to square 1 with people not being able to send their kids to college?

I need to read up on it some more I guess.

SpicyMcVoodoo · 07-13-2007, 10:49 AM

Originally Posted by thomez

It's extremely easy to lose money trying to collect on those loans when you are lending it out at well below prime rates to start with.

It can't be that hard to collect when they can garnish wages and withhold tax refunds. IMO, with all the additional means of ensuring collection that the the federal government has, interest rates should reflect that.

Stylerod · 07-13-2007, 10:58 AM

Originally Posted by SpicyMcVoodoo

It can't be that hard to collect when they can garnish wages and withhold tax refunds. IMO, with all the additional means of ensuring collection that the the federal government has, interest rates should reflect that.

Are we talking government loans, private loans or both? I assumed it was talking about private loan institutions.

thomez · 07-13-2007, 11:15 AM

Originally Posted by WickedLou9

The point is not to make a profit. The point is to make sure that these kids can go to college and become productive adults. it's not a profit making endevor, it's an expense, but it's one that will hopefully pay dividends in the future.

The point is that when you start providing something below-cost and controlling the interest rates of private lenders, you have taken a step toward a state-controlled student loan system. Not only that, but it will almost guaranteed lose money, so it is another expense for the American people.

SpicyMcVoodoo · 07-13-2007, 11:41 AM

Originally Posted by thomez

The point is that when you start providing something below-cost and controlling the interest rates of private lenders, you have taken a step toward a state-controlled student loan system. Not only that, but it will almost guaranteed lose money, so it is another expense for the American people.

It's funny that you characterize educating young people as a "loss" and an "expense."

Stylerod · 07-13-2007, 11:46 AM

Originally Posted by SpicyMcVoodoo

It's funny that you characterize educating young people as a "loss" and an "expense."

Welcome to the real world.

If a private business exists to give out loans they have to make money doing it.

Publius · 07-13-2007, 11:48 AM

Originally Posted by SpicyMcVoodoo

It's funny that you characterize educating young people as a "loss" and an "expense."

if a company's primary business is the originating of student loans, and suddenly they are handcuffed by government regulation to a point that they can no longer make a profit, how are they not experience a loss? How are they not experiencing net expense?

If the government were just reducing interest rates on government-created loans it would be one thing, but forcing down rates on private loan companies is unacceptable.

SpicyMcVoodoo · 07-13-2007, 11:54 AM

Originally Posted by Publius

if a company's primary business is the originating of student loans, and suddenly they are handcuffed by government regulation to a point that they can no longer make a profit, how are they not experience a loss? How are they not experiencing net expense?

If the government were just reducing interest rates on government-created loans it would be one thing, but forcing down rates on private loan companies is unacceptable.

He was talking about losses for the federal government in loaning out money. Since when is the federal government a business whose primary goal is profit?

SpicyMcVoodoo · 07-13-2007, 11:55 AM

Originally Posted by Stylerod

Welcome to the real world.

If a private business exists to give out loans they have to make money doing it.

And why should the student loan industry's profitability come before the nation's access to education?

Publius · 07-13-2007, 11:57 AM

Originally Posted by SpicyMcVoodoo

He was talking about losses for the federal government in loaning out money. Since when is the federal government a business whose primary goal is profit?

Apparently you didn't read all of his post? I bolded the parts you must've missed...:

Originally Posted by thomez

The point is that when you start providing something below-cost and controlling the interest rates of private lenders, you have taken a step toward a state-controlled student loan system. Not only that, but it will almost guaranteed lose money, so it is another expense for the American people.

But even if he were talking exclusively about the government, any monetary "loss" by the government shows up in the form of a budget deficit, something which I know you have repeatedly said yourself is a bad thing. Or is it only bad when it is because of programs that you disagree with?

thomez · 07-13-2007, 11:57 AM

Originally Posted by SpicyMcVoodoo

It can't be that hard to collect when they can garnish wages and withhold tax refunds. IMO, with all the additional means of ensuring collection that the the federal government has, interest rates should reflect that.

I don't think you are understanding. It doesn't matter if they are guaranteed to collect, if you have to put that kind of effort into it, you aren't going to make money when you lend it at less than 4%, especially if a government bureaucracy is involved in collecting.