Amid Bitter Health Care Debate, House Clears Student Loan Changes

After months of delays as education took a back seat to the health care debate, the House of Representatives Sunday night approved a mammoth bill that ties both issues together in a package that includes more support for Pell Grants and minority-serving institutions.

The votes in the House pave the way for enactment of a comprehensive health care bill that has dominated the Washington scene for the past nine months. But in a related budget reconciliation bill, they gave new life to legislation that would end federal subsidies to banks and convert some of that savings to college aid.

“Today we are investing billions of dollars in affordability and accessibility for students,” said Rep. Ruben Hinojosa, D-Texas, chairman of the House higher education subcommittee, just prior to the vote.

The budget reconciliation bill would provide $36 billion to increase the maximum Pell Grant from $5,550 to $5,975 by 2017 and cover a growing shortfall in the program. Other key provisions include:

n      $2.55 billion for minority-serving institutions, including historically Black colleges and Hispanic-serving institutions;

n      $2 billion in competitive grants to community colleges;

n      $1.5 billion for a program to help borrowers by allowing them to repay loans based on income;

n      $750 million in new grants to promote college access and completion.

By ending subsidies to banks, the legislation would require colleges to use Direct Loans issued by the federal government. This would save the federal government about $61 billion over 10 years. The savings not re-programmed to higher education would help pay for health care reform and reduce the federal deficit.

But with these new fiscal constraints, as well as the mounting Pell Grant shortfall, lawmakers dropped most provisions of the American Graduation Initiative (AGI), an Obama priority that would have provided even more money for community colleges.

While most of Sunday’s debate focused on health care, some members of both parties cited the implications for education. Rep. George Miller, D-Calif., chairman of the House Education and Labor Committee, said the reconciliation bill would provide “the single largest change in college affordability ever—at no cost to taxpayers.”

But Rep. Brett Guthrie, R-Ky., blasted Democrats for “using student loan dollars to fund this health care bill.” As a result, he said, the legislation would “put it [the health care bill] on the backs of our students.”

The House actually conducted two votes Sunday. With one vote, members approved a health care bill that had cleared the Senate late last year. As a result, that legislation now goes to the White House for President Obama’s signature.

But because House Democrats do not like some provisions of the Senate health care plan, they also approved a ‘fix-it’ bill – budget reconciliation – that includes the student loan changes. This reconciliation bill still requires an affirmative vote in the Senate, which will consider the measure this week.