U.S. House Approves Student-Aid-Funding Bill

The U.S. House of Representatives has approved a 2006 appropriations bill that includes funding for key federal student-aid programs. The measure provides a $50 increase in the maximum Pell grant to $4,100 and restores funding for several programs that the Bush administration had proposed to eliminate. The measure provides funding for Perkins-loan cancellations but offers no new capital contributions for Perkins loans. It also includes funding for Leveraging Educational Assistance Partnership and GEAR UP programs at current levels for the fiscal year that begins Oct. 1 and restores funding that the administration had proposed cutting for Federal TRIO programs.

The funding bill also would provide current levels of appropriations for the Federal Work-Study and Federal Supplemental Educational Opportunity Grants program in 2006.

An amendment approved on the House floor would prohibit the use of federal appropriations to guarantee to education lenders a 9.5-percent rate of return on certain loans funded by tax-exempt securities. Last year, Congress passed the Taxpayer-Teacher Protection Act to halt the practice temporarily until the issue could be fully addressed during the reauthorization of the Higher Education Act.

Rep. Chris Van Hollen, D-Md., who sponsored the amendment, argued that eliminating the benefit would free up billions of dollars to enhance opportunities for students to go to college. But Rep. John Boehner, R-Ohio, warned that the provision could cause many nonprofit student lenders, who use the subsidy to provide lower-cost student loans, to be put out of business. The amendment adopted by the House attempts to broaden the scope of the current prohibition contained in the Taxpayer-Teacher Protection Act to include a practice known as “recycling”.

Action on the spending measure now moves to the U.S. Senate.