House and Senate Pass 2010 Budget Resolutions With Student Loan Implications

The U.S. House of Representatives and U.S. Senate have passed differing fiscal 2010 budget measures that could affect federal student loan programs.

• On a vote of 233-196, with 20 Democrats joining Republicans in opposition, the House approved its version of the resolution, which sets broad parameters for federal spending and taxation for the fiscal year that begins Oct. 1. The House version includes a budget reconciliation instruction requiring the House Committee on Education and Labor to find $1 billion in savings among programs in its jurisdiction. The committee’s chairman has indicated that reform of the student loan programs will be the focus of that instruction.
  
  In response to concerns about the administration’s proposal to eliminate the Federal Family Education Loan Program, the House Budget Committee inserted in its report accompanying the budget resolution the following language supportive of FFELP service providers: “The Committee urges the Committee on Education and Labor to review options for the student loan program that will maintain a role for FFELP lenders in the student loan program, and to look to ways to achieve savings that capitalize on current infrastructure and minimize the disruption to students and the employees of FFELP lenders who currently serve 75 percent of loans at American colleges, universities, and community colleges.”
• The Senate version of the budget resolution, which passed 55-43, with two Democrats joining Republicans in opposition, contains no budget reconciliation instruction to the Senate committee that oversees federal student loan programs. The Senate approved an amendment offered by Sen. Lamar Alexander, R-Tenn., that supports “maintaining a competitive student loan program that provides students and institutions of higher education with a comprehensive choice of loan products and services.” In a statement, Alexander, a former U.S. secretary of education, said, “Historically, both students and schools have preferred using private lenders, and we should not take that choice away from them by leaving yet another enormous program to the control of the federal government.”

House and Senate conferees now will meet to work out the differences in the two versions and return a compromise resolution to both chambers for final approval.