Conservatives in Congress have already stated their opposition to the Student Aid and Fiscal Responsibility Act, but it appears they’re willing to do more to defeat the bill in the court of public opinion. Senator Judd Gregg of New Hampshire, the Senate Budget Committee’s senior Republican, requested that the CBO adjust its score on the bill to account for “market risk,” the risk that student-loan defaults will be greater than the standard rate used by official CBO reports.
Representative George Miller, chairman of the Committee on Education and Labor, responded immediately, charging that the bill opponents “didn’t like the truth – that our legislation generates almost $90 billion that could be used to help students, families, and taxpayers – so they shamelessly decided to have a little fun with the numbers.”
Miller then proceeds to show why the “alternative” estimate is simply wrong:
This alternative estimate ignores current student loan market conditions, under which the federal government is currently supporting 60 percent of all federal student lending. This estimate assumes normal credit market conditions, under which the federally guaranteed student loan program functions entirely independently, as it used to. It does not reflect today’s reality: that the federally-guaranteed student loan program is on life support. The federal government, through both the Ensuring Continued Access to Student Loans Act, and the Direct Loan program, is now financing 60 percent of all federal student loan activity. . . If this alternative estimate was based on this current reality, it would likely show a higher market-risk adjusted subsidy rate for the Federal Family Education Loan Program – again reflecting that the program is on life support.
Even so, the alternative estimate still finds that the switch from FFELP to DLP saves taxpayers enormous amounts of money: only $47 billion as opposed to the $87 billion in savings the original estimate predicted. It looks like the alternative score is less an evil plan and more a cheeky shenanigan.
Don’t let the hackery get to you: keep writing your Senators and help us put students over banks.