House Passes College Cost Reduction Act, Veto Threatened

The U.S. House of Representatives has approved legislation that would cut nearly $19 billion from the Federal Family Education Loan Program during the next five years and reallocate much of those savings to increased Federal Pell Grants and other student-aid programs.

The College Cost Reduction Act of 2007 won approval on a vote of 273 to 149. The White House, however, has threatened a veto of the measure. In a statement, the Office of Management and Budget criticized the legislation for targeting only 40 percent of its estimated savings to enhanced Pell Grants.

Rep. George Miller, D-Calif., who chairs the House Committee on Education and Labor hailed the legislation, saying that it would do more to help students and families pay for college than any federal effort since the 1944 G.I. Bill. “With this bill, we are saying that no one should be denied the opportunity to go to college simply because of the price,” Miller said.

Republicans, led by Rep. Howard “Buck” McKeon of California, ranking minority member of the House education committee, criticized the bill for creating nine new federal entitlement programs. McKeon argued that the legislation represents “the first step in an explosion of new entitlement spending and hyperinflation in college costs.”

Republicans were unsuccessful in offering a substitute measure that would have reduced the cuts to the FFELP to approximately $15 billion but would have allocated more funding to Pell Grants. Their substitute measure was defeated 189-231.

The version of the legislation approved in the House contains components of a proposed new funding model for student-loan guarantors that would provide additional financial incentives for preventing borrowers from falling 60 days or more behind in their loan payments, in return for reduced payments to guarantors for default collections and loan-account maintenance.

The U.S. Senate aims to take up its version of budget reconciliation and reauthorization legislation before the end of the month.