Published Online: August 11, 2009
Published in Print: August 12, 2009, as Proposed College-Loan Savings Would Aid Early Ed.

Proposed College-Loan Savings Would Aid Early Ed.

Congress is considering a significant new investment in early-childhood-education programs and school facilities, paid for by a major—and controversial—overhaul of the federal student-loan program.

A bill based largely on a proposal put forward by President Barack Obama in his fiscal year 2010 budget request would scrap the Federal Family Education Loan Program, under which the government subsidizes private lenders to make federal loans. ("President's Education Aims Aired," Feb. 28, 2009.)

Instead, under legislation passed by the House Education and Labor Committee last month, all loans starting next July would originate with the direct-lending program, in which students borrow from the U.S. Treasury. The change would save about $87 billion over 10 years, according to the nonpartisan Congressional Budget Office.

A portion of that savings, $8 billion over eight years, would be used to create a competitive-grant program to help states boost the quality of their early-childhood programs, serving children from birth through age 5, the bill says.

The bill also includes more than $4 billion to help districts revamp school facilities, including making them more environmentally efficient.

Rep. George Miller, D-Calif., the chairman of the House education panel, said during debate over the legislation July 21 that the measure would “write the next great education legacy for our country .... at no cost to taxpayers.”

But Rep. John Kline of Minnesota, the top Republican on the panel, called the student-loan changes a“government expansion initiative that crowds out the private sector in the name of a bigger, more intrusive federal government.”

And he said the new initiatives created under the bill, including the early-childhood program, would mean “perpetual new entitlement spending.”

The measure was approved on a largely partisan vote of 30-17, with just two Republicans, Reps. Todd Platts of Pennsylvania and Thomas Petri of Wisconsin, crossing over to vote with the Democrats.

The Senate Health, Education, Labor, and Pensions Committee is expected to introduce its own version of the bill in coming weeks. That measure could also make room for the new school facilities and early-childhood programs.

Challenge to States

To qualify for the competitive early-learning grants, states would have to rework their early-learning standards, step up program review and monitoring, offer comprehensive professional development, and screen children’s health, mental health, and disability needs.

States would also have to work on improving support to parents and assessing children’s school readiness. The program would be administered by the U.S. Department of Education, in collaboration with the Department of Health and Human Services, which operates the Head Start program.

The new early-childhood-education program created under the bill would be mandatory, meaning it would not be subject to the whims of the annual appropriations process. Last month, the House Appropriations subcommittee that deals with education spending rejected a $500 million early-childhood-education proposal in the administration’s fiscal 2010 budget request because it was too costly.

Danielle Ewen, the director of child-care and early-education policy at the Center for Law and Social Policy, in Washington, called the measure “a great first step.” She said she hoped it would “change the conversation” among state policymakers “not to be about quality versus access but to be about access to quality.”

Funding for Facilities

The bill also includes resources for school facilities—a longtime priority for Rep. Miller. Under the measure, more than $4 billion in school facilities grants would go out under the Title I, Part A formula. Every Title I district would get a grant of at least $5,000. The majority of the money would need to be used for projects that meet “green” building standards.

During the House committee’s consideration of the bill, Rep. Michael N. Castle of Delaware, a moderate Republican, voiced concern that Congress is spending money on a new construction program while it still hasn’t provided enough funding for special education.

Another huge chunk of the projected savings, about $40 billion, would be used to boost Pell Grants, which help low-income students pay for college. The bill would index Pell Grants to the Consumer Price Index, plus 1 percent, as Mr. Obama had suggested in his budget. The maximum Pell Grant award would rise from $5,550 in 2010 to $6,900 in 2019 under the bill.

But the measure would stop short of making the Pell Grant program mandatory, as Mr. Obama had proposed in his budget.

Another portion of the projected savings—$10 billion over 10 years—would be used to pay for a major community-college proposal that Mr. Obama introduced last month.

That proposal would include additional resources to improve school facilities and online course offerings. It would dole out grants of at least $1 million each for community colleges to help retool remedial and adult education programs and improve dual-enrollment offerings, such as early college high schools, among other activities.

As the partisan vote in the House committee indicates, the measure is sure to face significant opposition from some lenders and members of Congress, who worry about expanding the federal government’s role in originating loans.

Still, the bill would preserve a role for the private sector. It would establish a competitive-bidding process that would permit the Education Department to choose lenders to service loans, based on the quality of their service to borrowers. And nonprofit lenders would continue to service student loans.

Vol. 28, Issue 37, Page 21

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